Monetary Metals on Gold Demand

The first part of each week’s article written by Keith Weiner is usually monetary egghead stuff (said with much respect for this man who has forgotten more about the subject than I know).

Feel free to read it if you like…

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At the end of each report Keith updates the supply/demand fundamentals of gold and silver. Check out his thoughts on the difference between gold buying and silver buying. Also, how this buying in gold differs from the last several (bear market) years. It’s interesting at least.

Here is the gold graph showing gold basis, cobasis and the price of the dollar in terms of gold price.

The price of gold is up, yet it is still scarcer (at least the near contract, the gold basis continuous is basically flat).

We keep writing about this, not because gold is so scarce that we fear a bout of backwardation or worse yet, permanent backwardation. We write about it because it’s a change from the last several years. We now see price rising, and rising scarcity. That means the rising price is driven by buying of physical metal. It is not merely leveraged futures speculators front-running themselves.

The Monetary Metals Gold Fundamental Price is up another $12, to $1,419. It is above its level from a year ago (which peaked over $1,500 while the market price peaked around $1,450). Very interesting indeed.

Now let’s look at silver.

Unlike in gold, the scarcity of silver is down a bit. That means the rise in price is driven more by futures market speculation, and physical metal demand is a bit weaker.

Still, the Monetary Metals Silver Fundamental Price is holding pretty steady, down 7 cents to $16.45.

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