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Precious Metals Supply and Demand – Thanksgiving Week

Summary:
See the introduction and the video for the terms gold basis, co-basis, backwardation and contango. Grain of Salt Required The price of gold fell , and that of silver 24 cents. This was a holiday shortened week, due to Thanksgiving on Thursday in the US (and likely thin trading and poor liquidity on Wednesday and Friday). So take the numbers this week, including the basis, with a grain of that once-monetary commodity, salt. We will keep the market action commentary brief. Relatively modern examples of salt money which was widely used in African countries until the early 20th century. The bars were clad in fibers to keep them from breaking up. The specimen at the top and in the bottom left corner were collected in

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See the introduction and the video for the terms gold basis, co-basis, backwardation and contango.

Grain of Salt Required

The price of gold fell $7, and that of silver 24 cents. This was a holiday shortened week, due to Thanksgiving on Thursday in the US (and likely thin trading and poor liquidity on Wednesday and Friday). So take the numbers this week, including the basis, with a grain of that once-monetary commodity, salt. We will keep the market action commentary brief.

Various Salt Money Units

Relatively modern examples of salt money which was widely used in African countries until the early 20th century. The bars were clad in fibers to keep them from breaking up. The specimen at the top and in the bottom left corner were collected in Ethiopia (formerly known as Abyssinia), where they are used as a medium of exchange among nomads living in the Danakil Plains to this day. The salt-filled package made of leaves in the bottom right corner is late 19th century salt money from Angola. [PT] - Click to enlarge

Fundamental Developments

Here are the charts of the prices of gold and silver, and the gold-silver ratio.

Gold and Silver Price

(see more posts on gold price, silver price, )
Gold and Silver Price

Gold and silver priced in USD - Click to enlarge

Gold:Silver Ratio

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. The ratio rose.

In this graph, we show both bid and offer prices for the gold-silver ratio. If you were to sell gold on the bid and buy silver at the ask, that is the lower bid price. Conversely, if you sold silver on the bid and bought gold at the offer, that is the higher offer price.

For each metal, we will look at a graph of the basis and co-basis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and co-basis in red.

Gold:Silver Ratio

(see more posts on gold silver ratio, )
Gold:Silver Ratio

Gold-silver ratio, bid and offer - Click to enlarge

Gold Basis and Co-basis and the Dollar Price

Here is the gold graph showing gold basis and co-basis with the price of the dollar in gold terms.

The co-basis (our measure of scarcity) of the Feb contract rose slightly, as the price of gold fell slightly.

The Monetary Metals Gold Fundamental Price is up 8 bucks.

Gold Basis and Co-basis and the Dollar Price

(see more posts on dollar price, gold basis, Gold co-basis, )
Gold Basis and Co-basis and the Dollar Price

Gold basis and co-basis and the USD priced in milligrams of gold - Click to enlarge

Silver Basis and Co-basis and the Dollar Price

Now let’s look at silver.

The story is the same in silver, with a bit larger rise in the co-basis.

The Monetary Metals Silver Fundamental Price is up 22 cents.

Silver Basis and Co-basis and the Dollar Price

(see more posts on dollar price, silver basis, Silver co-basis, )
Silver Basis and Co-basis and the Dollar Price

Silver basis and co-basis and the USD priced in grams of silver - Click to enlarge

© 2017 Monetary Metals

Charts by: Monetary Metals

Image captions by PT 


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Keith Weiner
Keith Weiner is president of the Gold Standard Institute USA in Phoenix, Arizona, and CEO of the precious metals fund manager Monetary Metals. He created DiamondWare, a technology company that he sold to Nortel Networks in 2008. He writes about money, credit and gold. In March 2015 he moved his column from Forbes to SNBCHF.com

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