"The real key to these markets is the physical demand"...David Morgan
But David, the physical demand is only half of the key because it has to be viewed in the context of the available supply...Silverwood
I'm not really impressed with David Morgan, he really doesn't talk about the fundamentals.
I what I find so funny is that all of these PM experts give 15-30 minute interviews and never say the key world, INFLATION!
How in the world can anyone talk about the gold/silver markets and never acknowledge that there's no inflation today, they just avoid that subject completely!
Hey David Morgan, how about saying "the reason why silver trades at $15 oz today is because the dollar is soaring and all commodity markets are weak, this is because there's no inflation and I was wrong about QE being inflationary"?
If we look at the key ratio, gold/oil trades at 15.7 today, which is basically above the average the last 60 years, as we can see it trades around 10-15 with a few spikes to 20-25 for very short period of time. http://www.macrotrends.net/1380/gold-to-oil-ratio-historical-chart
So why anyone would think that gold (or silver) is undervalued in this scenario is just plain wrong, if the ratio heads to 10, we could see $70 oil and $700 gold next year.
I think looking at silver to gasoline or silver to milk would be a waste of time in trying to find value for either commodity.
I'm just showing that the gold/oil ratio is not showing any extreme undervaluation for gold in relation to other assets (oil/dollars) that many PM investors are suggesting.
If oil was trading at $150 and gold was at $900, then they have a great case for not only undervaluation but also manipulation, but that's not taking place today.
The Dow/Gold ratio trades at 15 today, hell in 1999 it traded at near 44, many stock investors might see value in stocks relative to hard assets today.
Huge Solar Plant Lags in Early Production
By MICHAEL R. BLOOD
LOS ANGELES (AP) -- The largest solar power plant of its type in the world - once promoted as a turning point in green energy - isn't producing as much energy as planned..."
The failure of this project puts a clear target on the back of the solar photovoltaic industry. The sheet has not been pulled over the corpse yet, but the patient is not looking all that great.
The failure of the solar industry to meet projections in this project when given every opportunity to shine (so to speak) will lead to lower investment, period.
Any projections of silver use in the solar industry will need to be tempered. Wildly bullish projections of PV silver use made just a few years ago are falling far short in reality.
This new data is not going to breathe new life in the industry.
China Hunger for Clean Energy to Leave No Rooftop Behind
By Bloomberg News Nov 12, 2014 9:27 PM ET
Photographer: Philippe Lopez/AFP/Getty Images
A masked worker sorts silicon wafers at the Trina Solar Ltd. manufacturing plant in Changzhou, China.
China, the world’s biggest solar market for two years running, is pushing to install more panels at factories, schools and even greenhouses as it seeks to meet its goals under a historic climate agreement with the U.S.
China expects to install as much as 8 gigawatts of small solar systems this year, more than 10 times what was built last year. The country had almost 20 gigawatts of solar capacity at the end of 2013, a figure comparable to about 20 nuclear reactors. Most of that came from massive solar farms in remote locations and policy makers are now promoting smaller systems closer to where they’re needed. ...
"Total physical silver demand is seen down 6.7% in 2014"
"Industrial demand was forecast down 1.8%, with jewelry seen down 4.4% and silverware down 6.3%"
These are the core reasons why silver trades at $16 oz today, yet nobody around here wants to talk about these aspects of the silver market.
being the major factor in determining price--or at least it should be.
Regardless what zman says, the physical prices are not being determined by physical supply/demand, but rather paper supply/demand.
When JPM can "sell" 150,000,000 ounces of silver via a computer entry, and silver is then priced based on that faux "supply," the result is that we get prices as if silver was simply flowing out of the ground, in .999 pure form, with no mining needed. Just the cost of labor to scoop it up and reform it to needs.
zman and the bankers see that 150,000,000 ounces JPM conjures out of their keyboard as just as real as 150,000 comex bars on the vault floor.
You see, the comex futures pit IS the silver (and gold) manipulation.
True supply and demand will not be the price-making mechanism so long as there exists one ounce of physical that can be rerererererererehypothecated into 100 or more cyber-ounces.
If you want to continue to believe that buying paper silver should change the supply and demand of the physical market, you're going to get very frustrated.
For every short sold into the market, there's a buyer. If that buyer never takes physical delivery of that silver, they are NOT silver investors, they are a paper speculator.
Have you ever wondered why there are NO shortages of physical silver for industry or investment the past 3 years? Because there's plenty of silver even at $16 oz today!
If investors truly thought that price suppression was taking place and that silver offered great value at $16 oz today, they would be buying it until there was none left, that's NOT happening.
Why can't Sprott get investors to buy into his PSLV fund? They're not interested.
Did they use a calculator?
Numbers from the bottom of the article
Demand (in mln oz ) 2013 2014 (forecast)
Jewelry 189.2 197.9
Coins & Bars 191.6 241.6
Silverware 46.2 49.5
Industrial Fabrication 588.0 577.5
Physical Demand 1,077 1,004.5
Doing the math on my calculator I get
Physical Demand 1,015 1066.5
I get Physical Demand Projected to INCREASE by 5 per cent 2014 versus 2013
Did the writer have a calculator?
and here is from Reuters in May of 2014 (You'd think the 2013 numbers would be complete?)
2012 2013 Demand (in mln oz )
Jewelry 181.4 198.8
Coins & Bars 139.3 245.6
Silverware 44.6 50
Industrial Fabrication 589.1 586.6
Physical Demand 954.4 1,081.1
"For every short sold into the market, there's a buyer. If that buyer never takes physical delivery of that silver, they are NOT silver investors, they are a paper speculator."
The corollary, of course, is if the short seller does not (or cannot) deliver physical silver, they are NOT silver sellers, they are a paper speculator.
And hence, comex IS the manipulation.
The paper PM markets are the fiat of metals. These futures/paper markets should be required to possess 1 ounce of PMs sor every ounce of paper they sell. If that was the case then a supply/demand PM market would respond like it should. When the comex sells 100 ounces of PMs with only 1 ounce of product that is a very poor representation of a supply/demand market.
Just think, If I could spend $100 for every $1 I have I would be rich, gosh what a deal.
Zman, you can spin it and justify it as much as you want but the paper futures markets are no better than our currency and the federal reserve printing away as much QE, Twist, currency swaps,,,,, etc. as they want. There is no true representation of value, just speculation on huge margin.
The paper markets don't control the price discovery, it's the physical markets that dictate price, paper trades off of physical.
I'm not spinning anything, do you notice no one answers my basis questions about shortages?
Has the Comex ever failed to deliver metal? No, it functions just fine.
Did you have a problem with the markets when gold went from $250 to $1900 and silver from $4 to $50? I didn't think so!
If the paper price is $16 and I head to the local coin store and buy an ounce of silver for $16 then $16 is the phys price. I put up the fiat and I take delivery.
If this theory about how paper price is not the right price were true then my local coin store (or anybody else with physical) would not sell me an ounce of silver for $16. The mines would not sell silver to make the coins. And everything would grind to a halt.
Plenty of physical silver is changing hands every day and it is all changing hands based on the spot price of the major exchanges.