Simple explanation for the recent PM fall

There could be some relation between the price of PMs and the price of oil right now, but they're not synchronous swimmers. The historical charts of gold and oil, for example, show some discrepancies. For example, annual averages of both were increasing between 2002 and 2008, but the annual average for oil in 2009 decreased by more than 40% over the previous year, while gold's cumulative average rose by more than 10% during the same time frame.

 

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I agree with you that it's likely we'll see $120 oil before we see $50 silver. Good to own both.

 

I can't speak to platinum as I am not familiar with it, but I can answer this question in regards to gold. It's not possible to control the price of gold through Comex manipulation because a great deal of physical gold in the world is held as a monetary asset by governments, central banks, and even by large retirement funds. The shorts can never corner the supply as they can with silver.

Governments are also buying gold these days. Mexico just announced that it bought a 100 tons, and there was even a state retirement fund, I believe, that announced that it took deliver of a billion $s worth of gold. No such equivalent in silver.

Silver = a speculators metal
Gold = a store of wealth

 

Of course you're correct. Oil and PM prices diverged in 2009 when the global recession damped demand for oil.

I think for now though that synchronous relationship is back in place.

 

University of Texas as part of their endowment recently bought 500 million in gold, bringing their total gold assets to 1 billion, or around 5% of the endowment.

 

Howdy folks,

Great thread as usual.

What caused the silver correction [or crash if you prefer]?

Geez folks, silver was up over 150% in the past year, the exchange raised the margin requirement 5 times recently, some major investors sold their silver - soros and carlos slim, and it's May.

Answer me true, was anyone seriously surprised that we saw a 26% pullback?

I reduced my paper holdings quite a bit as my stops were blown. However, I'm looking to buy physical while it's on sale. The POS seems to be firming here and gold is back to rising and above 1500. I would NOT get to giddy, however, as we're still fighting seasonality and that will last until the fall.

As for conspiracies or manipulation - the best arguement against conspiracies was by Jim Rogers - if there ever had been, someone would have writtne a book and made a movie.

As for manipulation, I've always considered it human nature and patently normal for anyone, anywhere and anytime - in a postion to impact the market to their advantage - will do so. Period. Is that bad? Hardly. It's the way the bloody game is played. ****, if I could impact the market and make a few bucks - on all over it. This is basic Jesse Livermore folks and has been going on for centuries.

peace,

rono

 

I will accept what you say about gold, but it begs the question: If gold is less manipulativable, but yet has greater short position than silver, does the short position in silver really mean much? The silver bulls always point to this number and state it "proves" manipulation, but if gold is less manipulativable yet has higher shorts, what does this mean? To me, the short versus longs in the market are NOT proof of the market manipulation with these facts in place.

Chris

 

I don't think it is true that gold has a greater short position -- at least not in percentage of available inventory. I would like someone to post a source for that information.
Edit: to insert "at least not in percentage of available inventory"

 

I was referring to your post earlier Cloud, and the fact that gold and platinum had a higher ratio of short concentrations than silver did. People point to silver short concentration as "proof" of manipulation, and on the face of it, if gold has a higher concentration, it negates that argument.

 

I don't follow gold and platinum as much. The 4 largest gold shorts are about 15M ounces while the 4 largest silver shorts are3 180M ounces. When you consider that there are more above ground ounces of gold than silver, I consider it more difficult for the silver shorts to deliver than the gold.

I don't think you have negated any arguments about silver. Other organizations like GATA have been complaining about gold manipulation for years.