Waiting on The Bernank
On a day where not much is happening ahead of the FOMC and The Bernank, what in the world does a Turd write about? Fortunately, Turd has friends who can help him out of this predicament.
First up, I spent a considerable amount of time this morning getting caught up with my new pal, Winston. It's such a dull day globally that he was able to spare some time. Apparently, even London physical trading is very quiet today and Winston estimated that less than 10% of all trades were "real", the rest being simple HFT paper trades attempting to game stop orders and the like. Even physical buyers in London, who have been accumulating on nearly every fix recently, were on standby today but he suspects that won't last for long. One last nugget he shared with me...In Shanghai overnight, the backwardation in silver of spot versus the front-month on the Comex reached over $1. In other words, though paper silver may be trading at $30.80 in NY, someone was willing to pay nearly $32 for physical silver in Shanghai earlier today. Hmmmm. I'll let you draw your own conclusions regarding that.
Next, I'd like to highlight two, terrific bits of information from your fellow Turdites that were written into the comments of the previous post. The first is from SRSRocco. Steve does a fantastic job of digging into the fundamentals and uncovering the truth, be it about gold, silver, crude, whatever. It's the kind of work I'd like to do but my ADHD prevents me from even attempting it.
THE NEGATIVE NEWS FLOODGATES ON SILVER ARE NOW WIDE OPEN
As I sit here and read comments on this blog as well as articles on silver, I see a trend taking place. Silver investor sentiment is hitting rock bottom (maybe will fall even more) and the psychology is now in the HANDS OF THE FED & MEMBER BANKS. They have done a very neat trick this past year using all methods of manipulation and negative hit pieces on silver in the MSM. You don't need alot because you get BRAIN DEAD ANALYSTS who come in behind to fill in the rest.
I am simply amazed at what I see. I have been in silver since 2002, and have never looked back. In the past 10 years I have seen silver bug extremes. As I see the reports coming out about higher comex inventories, low premiums, low silver eagle sales, and etc, the sentiment falls even further. It is a NEGATIVE FEEDBACK LOOP and it is working HOOK LINE and SINKER.... just as the FED designed.
Here is a typical part of an article about silver:
Demand for silver fell in 2011 for the first year in four as Europe’s debt crisis sapped industrial use of the metal found in solar panels and photography, Thomson Reuters GFMS said in a report on April 19. The decline in ETP assets yesterday drove holdings to the lowest level since August.
“The price drop drives fund selling and that in turn drives prices even lower,” said Sun Yonggang, an analyst at Everbright Futures Co., a unit of China’s largest state-owned investment group. “Silver isn’t holding up as well as gold because it is still primarily an industrial metal.”
Demand for silver fell in 2011.... that's the big line there. Let's take a look at GFMS newest 2011 chart on silver demand:
World Silver Supply and Demand (million ounces)
(totals may not add due to rounding)
|Net Government Sales||44.2||11.5|
|Old Silver Scrap||228.7||256.7|
|Implied Net Disinvestment||-||-|
|Coins & Medals||99.4||118.2|
|Implied Net Investment||184.6||164.0|
In 2010 silver demand as 890 million ounces. What's funny is if you go to their website, you will notice that their total 2010 demand figures were 878 million oz. Somehow they adjusted their 2010 figures higher by 12 million ounces. If they revise figures each year, will 2011 turn out higher?? Who knows. Furthermore, the Fabrication demand in their old 2010 figures was 487 million. They revised it up to a cool round figure of 500 million.
The interesting thing to note is the IMPLIED NET INVESTMENT (this just means total investment). They state that there was actually less investment buying of silver in 2011 than 2010. How can that be if Coin & Medals (most official coins such as Eagles & Maples) were up from 99.4 million to 118.2 million?
The answer to that question is this.... GFMS has to make sure that the TOP SUPPLY FIGURES match up with the BOTTOM DEMAND figures. They don't want any surpluses or deficits in this accounting category. However, they will show a so-called surplus of 260 million oz this year due to their CREATIVE ACCOUNTING. That is for another post coming later.
Lastly, the real news is in the SUPPLY CATEGORY at the top. Here we can see that Government sales from China and Russia fell off a cliff from 2010... 44 million down to 11 million in 2011. Also, Producer Hedging declined a substantial amount of nearly 40 million oz. Together that accounted for nearly 70 million oz less than 2010.
The total supply was down 34 million oz from last year so the folks at GFMS had to do some creative accounting to make it look like INVESTMENT DEMAND was lower along with Fabrication demand.
FOLKS.... THE JOKE IS ON US.
Then there was this terrific analysis of AAPL from "Number 47". It would take a great amount of fortitude to step in and short AAPL here. Even put buying seems like a waste of money. However, the chart pattern is what it is. If APPL doesn't follow the historical pattern going forward, it will truly be one-of-a-kind.
"It's summer here in Ireland, rain and wind galore. No hibernating at this time of year.
You can't eat an Ipad, food, gas, tax and service price inflation V wage stagnation and underemployment does not bode well for aapl. On Bloomberg yesterday the talking heads were speculating this is a $1000 stock and to count increments in price in only $100 moves.
New paradigm? Can't lose? Investment of the century etc, etc?
Ripe for the bears, fatten us up before the long sleep. "
OK, that's all for now as we wait for The Bernank. I would caution everyone from gambling ahead of this afternoon's fireworks show. Though underlying physical demand will continue to provide a stable floor here, the best advice would be to sit back and enjoy the theatrical nonsense and wait for tomorrow before acting.
More post-Bernank. TF