Lately at least - from a cursory viewpoint. When Gold is up and Copper is up – Silver follows @ a percentage change greater than Gold. When Gold is down and Copper is down – Silver follows @ a percentage change greater than Gold. When Gold is up and Copper is down – Silver follows @ a percentage change less than Gold. When Gold is down and Copper is Up – Silver follows @ a percentage change less than Gold. When Copper is steady – Silver follows @ a percentage change somewhat close to Gold.
Interesting observation. But it makes sense since silver is both a precious metal and industrial metal.
I know this is outside of gold and silver bullion Before mandated E-10 gasoline and the big rise in oil prices several years ago the basic mindset was $75.00 oil was the competitive point for ethanol fuel. Since the oil price rise, which spawned significant investment into capacity for domestic ethanol production, the competitive point has moved to around $50.00. Earlier this year corn and soybean prices seemed to have pegged to oil at this point. Maybe we need to develop the bushel/barrel ratio.
I never thought it was a good idea to turn food into fuel. I also never believed that ethanol was competitive at any price since I saw some compelling scientific articles that said it takes more energy to produce and deliver a gallon of ethanol to a customer than the energy contained in the gallon. If the science doesn't make sense, then no price will change it.
Whether there is a net energy loss with ethanol (which is debatable) or not really doesn't matter. Ethanol production is the process of storing energy in a liquid form that can be distributed to users of motor vehicles at a price and convience competitive with petroleum.
A lot of the energy cost in ethanol is in the running of farm machinery to plant and harvest crops and deliver them to the ethanol plant, and moving the ethanol by truck to the service stations [ethanol cannot be transported by pipeline unless it is stainless steel, which isn't the case]. There is also a loss in the use of fertilizer, which requires natural gas to produce and trucks to deliver. Also, for every acre of food lost to ethanol, another must be planted to replace the lost food production -- another huge energy cost. To make matters worse, ethanol reduces fuel milage and requires more frequent replacement of the vehicles because it is so corrosive, another huge energy cost. It's a fuel only a politician from a farm state can love.
It doesn't matter. Ethanol capacity has been invested in. Those who have sunk or contractually obligated money for this capacity are not going to allow it to lay idle as long as per unit price is above production variable cost.
You're probably correct. The nation will burn its food for fuel regardless of consequences. The inability to forsee consequences is what got us into this mess in the first place.
Most farm machinery is diesel, which can be made from soy beans. Believe it or not, the government still pays farmers not to grow. The only reason farmers grow anything is for the money. When the price goes up, more is planted. The farmer doesn't plant to replace lost food production, he plants to make money. Obesity is a big problem in america, lack of food is not.
It certainly wasn't my intention to spur a debate on ethanol. I was just posting some personal observations from an investing standpoint. The first puts a twist on the old entrenched gold/silver ratio by giving wieght to the price of copper. The second puts forth the idea that maybe a bushel/barrel ratio might be a useful investment tool.
Silver and gold are tied at the hip to the value of the dollar. You can take a chart of the dollar value and turn it upside down and place it over a silver spot price chart....it matches up perfectly.
I thought I would chime in on the Ethanol debate since it was brought up. It is always interesting to me to see how so many people have conflicting opinions about it. First, how much #2 field corn does a person eat. Answer; none. A large portion does get used for livestock feed, but the ethanol making process only uses the starch from the corn, the rest goes on to livestock with an improved protein and fat/oil value. Second, the #2 field corn industry has been producing around 10 to 11 billion bushels of corn a year for many years. The same before ethanol and during current times. How can you figure every little energy expenditure to make corn against it when it will happen regardless of ethanol? You can't. Besides entities without a negative agenda are coming up with very positive energy ratios for ethanol production. And it is only getting better every year as technology evolves. Now you want to know the cost in energy to bring oil to the us and refine it and distribute it? No you don't. So why does everyone hear such negative info about ethanol? Simple. Who has lots of money and lots to lose? Third, the farmer is giving a viable solution to a real problem right now! Who else is? And no, there are no rain forests being cut down so the US farmer can make more fuel. Anyone who believes that rhetoric is doomed to believe just about anything. Thanks justafarmer for the interesting analysis. I will keep an eye on it.
