zaterdag 18 augustus 2012

Silver Inventories at CME and Lease Rates

Just a few weeks after I turned bullish on silver, articles are sprouting out of nowhere about silver inventories being historically low.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/8/17_Expect_Major_Silver_Price_Spike_As_COMEX_Inventories_Decline.html

However, I see signs of a temporary weakness in silver.

1) The silver stocks at the CME aren't actually going down anymore. They are going upwards (Chart 1).

Chart 1: Silver Stocks CME
2) The silver lease rates are actually going down, instead of going up. Historically, when silver lease rates plunge, the price of silver will go down a few months later.

Chart 2: Silver Lease Rate
Conclusion: I would be wary about the price of silver. If this trend continues this way, look out below!

2 opmerkingen:

  1. Its quite difficult to predict how markets will behave based on historic data. In your last post about silver when you predicted the price would increase above $30/oz, it went down to $27/oz. In this post, you thought the market was weak, but the price increased from $28/oz to over $31/oz.

    What actually happened was the market's expecations changed: the possibility that fiscal or monetary stimulus programmes would be announced in China, Europe or the US seem to have prompted investors to buy silver as a hedge against inflation.

    However, at the time of writing, no stimulus packages have been announced, and the price of silver seems to be slowly drifting downwards again.

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  2. That's right, we can't predict it, we can just state the evidence and try to speculate on that. If China or the U.S. suddenly does QE of 1 trillion dollars, then you know to act on it.

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