The silver and gold ratio is about to get crazy
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There is something going on behind the scenes with all the silver leased by China to the US just over a decade ago. I just don’t know the exact details.
I am not sure they were leased. However, when China negotiated with every countries to join WTO, there was a condition for it to sell some of its large silver holding in COMEX and LBMA. It happened between 2002(?) to 2008(9?) and stopped. China became a net silver importer after that. Whether the silver is leased or outright sold, I don’t know. The selling of few thousand tons a year did happen and was documented.
My memory is that it was a 10 year lease agreement. But I’m getting old and my memory is not getting better with age.
But I am sure China started to sell silver before 2004. The first return should be at least last year if it is ten year lease.
I know that since 2004 was the year I started to buy silver and I found it out and I thought china was foolish to do it and later know there were the conditions to join WTO, the other condition is to purchase treasury
Hi Doc, when SLW broke 23.75 you told me to get back to you when it reached 21. It got to 21.30 today. Time to buy or do you have a new low target? And if you think gold is better than silver, maybe we should buy RGLD instead of SLW. Thanks.
For what it’s worth, SLW filled a little 8 cent gap today when it hit 21.26. It is oversold but looks like it wants to test uptrend support at about $20.70.
http://stockcharts.com/h-sc/ui?s=SLW&p=D&yr=1&mn=3&dy=0&id=p53459690965&a=364039891&listNum=1
Bonzo, I wouldn’t touch anything here yet for a number of technical reasons—-you should have plenty of time to take a good position in the future when things calm down a little and these PM stocks bottom. As I mentioned in the past on a number of occasions; I,m not taking any new positions until at least the end of September. I’ll look at the technicals then and decide if I’ll wait until late October or dip a toe in the water then. There’s enough technical damage where there’s no hurry to get in right now especially since I feel we may have some angst yet for October as well.
Doc,
As always, thanks a million for your superb inputs. Very much appreciated.
V
Vortex, you’re welcome—–I’ll always attempt to be as objective as possible.
Doc, don’t you change a thing. You continue to call it like you see it with your superb analysis to back it up.
Big Al hit a home run when he made you a full-time commentator.
V
Excellent comment Richard.
I noticed that Doc, who we are on the phone with right now, already addressed your question.
I never gamble in casino but I have gambled once in silver before. It was in October 2008 and I turned out to be right. It might be the time to gamble again.
I think this is the delivery month in silver and next one will be December. The open insterest in silver is seriously wrong in silver and it defies logic. Someone must be exchanging paper for physical. The exchanges and the players are increasingly lawless. Anything can happen.
I “gambled” in that casino a number of years ago ($14/oz) and remain happy today!
I feel old…..My first few thousand oz were bought at $3.50
Mine at 7 at 2004
lawrence you may be on to something..
Where going to begin a deflation in equities very soon..Meaning money will start to flee.. Timetable after november 4th.. Markets are always forward looking..
For myself still on the sidelines but at some point very near term im going to go in.
I will let you all know.
Just don’t play futures. Shares are also a gamble I feel. I remember one great investor I respect said that in a end game scenario, everything can happen. They may declare force majeue. If I am the big guy and I can default without having to decare bankruptcy, I will short the market to nothing gradually and get as much physical as possible and let exchange to make everyone settle in cash.
So you are figuring very early November, Glen?
Yes i believe equities begin to sell of november 4th and forward. Ive been keen on this as you know for over 6 months now. Something like that. I mentioned that far back that obama administration would not allow it to go down.. When the equities go I believe this is going to be the biggest move ever seen by the miners. We are talking big money to be maid. Patience is all i can say. We are very close to a turn..
Richard,do we break 1180 or hold tripple bottom? By the looks of it today.. Where is your money on this bet?
Glen, it’s anybody’s ballgame right now—–the key I’m watching right now is the longterm uptrend line for gold which lies in the 1160-1180 range. If we break below 1160 and hold there for a couple of weeks we’re going to be in for a longer period of time before we see 1900 again. The one positive is that we’re probably due for a reflex rally in silver soon and that should shore up gold for a couple of weeks. I feel if we don’t take out 1180 by the end of October, we have a chance of averting a lower move for some time. I feel we have further pressure on the PMs yet. The COTs moved positively for the PMs this week—–it’ll be interesting to see them for next week. Some of the PM stocks are breaking lower and I guess I’m salivating and hoping they move lower so they can be bought at fire sale prices.
Richard,
Thank you! I just wanted to add something that has not been talked about on the show.. The short ratio in many miners i follow and hold has been decreasing month to month and now at a very attractive level. This speaks volumes to me as it is one of those indicators I look at that is not on a graph.
The only thing that worries me is the fact equities has not started to correct. I believe now and have always mentioned here that for me to see the next run and bull alive, i would have to see the equities deflating.. That hot money along with the us currency money needs to start pouring into metals at some point..
Good points—-I appreciate them—-I just get this feeling that we have one more catharsis for some of the PM stocks and that could happen in October. The only 4-5 stocks I’ve kept moved down just pennies today. They’ve been washed out and I’ll probably add to my positions in this downturn and watch for technicals to tell me when to add some of the PMs that have been taken to the woodshed. It’ll be an opportunity of a lifetime. Of course, you may have to hold them in a trading range for some time before they move again. I feel this move is what will cause just about everyone to throw in the towel. Once again, thanks for the info—–it’s difficult to keep an eye on everything and that’s why it’s so valuable having a site like this along with the many knowledgeable folks on it.
I feel mining equities will correct if this continues for any length of time. I am glad that I haven’t added any shares since June and may have to get rid of some of silver shares. Just maybe. I like them a lot but they may perish under this price, just looking at the loss at $20+ level.
If they refuse to correct, we are onto something. PM may comeback quickly.
Did Fonzie jump the shark?
Many of you may be familiar with this expression.
For those of you who are not let me edify you.
The phrase “Fonzie jumped the shark” refers to the classic sitcom “Happy Days”, when in season 5 Fonzie jumped over a shark on water skis. At that point the producers, actors and fans knew it was over. The show had run its course.
The phrase became an idiom to describe not just a television show, but in a broader sense anything that starts to devolve, come to an end and break down or apart.
So did Fonzie just jump the shark?
Happy Days needed to resort to tricks and gimmicks, like Fonzie jumping a shark, to keep the viewers interested.
Is Wall St. resorting to tricks and gimmicks as well?
It seems to me that everyone is now on one side of the boat.
Gary declares stocks are safe, just pick your stops and the skies the limit.
Easy money.
Today is the day for ALIBABA.
THIS COULD JUST BE THE LAST AND BIGGEST TRICK OF ALL.
At this point this is as good as it gets.
We have reached the top of the mountain.
The largest IPO in history
$92.70 is the open.
IT IS A BRAVE NEW WORLD
OR
DID FONZIE JUST JUMP THE SHARK?
I will put the question to you and I will leave it with you.
Now regarding this interview.
Today’s action was not about SCOTLAND.
This is all about ALIBABA.
Gold does not follow silver.
Sometimes silver leads gold, sometimes gold leads silver.
But gold always plays the tune.
I said silver could go all the way to $4
I see no reason to change my mind.
That does NOT mean it is. But it could.
When the dollar was crashing several years ago super model Gisele Bundchen demanded she not get paid in the dollars. Almost over night the dollar bottomed and started its long move upwards. It was known as the “Bundchen Bottom”
So was Al’s famous 5 to 10 bucks (Figuratively Speaking) statement the bottom?
The NASDAQ has turned negative
The S&P is flat.
The DOW is losing its gains.
Everyone has finally capitulated and expect stocks to reach to the sky.
All that’s left is for the retail investor to come in and get slaughtered.
Regarding gold – the deck has been swabbed. The carcasses have been swept overboard.
SENTIMENT IS IN THE GUTTER
NOW ITS TIME TO STAY OUT AND WAIT FOR THE TREND TO CHANGE ACCORDING TO AL
But wait…gold is holding its critical level.
Could it be the sellers are exhausted?
Could it be that Janet Yellen, the FED, and ALIBABA could be the last trick Wall St. has up its sleeve?
This is ALIBABA’s day. But OCTOBER IS RIGHT AROUND THE CORNER.
I contend GOLD IS HOLDING A VERY CRITICAL LEVEL.
I contend the BOTTOM COULD VERY WELL BE IN.
I believe NEXT WEEK WILL BE VITAL.
AL I BELIEVE LIKE GISELE BUNDCHEN YOU JUST CALLED THE BOTTOM!
5 to 10 bucks figuratively speaking!
I sure hope so.
By the way, I do appreciate your commentary!
On Friday September 19th,2014 shortly after 12:30pm eastern standard time the GOLD MARKET BOTTOMED AT $1212.80
James where you a buyer today? On the sidelines?
I believe James wants to convince himself that
gold finally bottomed.
It would be nice James. Everything I follow says
its near. No guarantees. If this downward trend
picks up steam its very difficult to know where
it is. The turn will come violently….IMHO.
I think too, no one is prepared or will have
the timing in place. Very few will be on board
the gold train. Regardless of the posts here
that say otherwise. History proves its going
to be like catching a falling knife from 10 stories.
THIS GOLD TRADE IS FAR FROM EASY.
In fact, in more ways that not its impossible.
For the big money fortunes. The risks are just too high
for 99 percent of investors. Could be higher.
Richard,
Also the most attractive indicator I have been watching is the book value on some of these miners. I’ve learned from some of the best that anything below half the book value is a green light providing company is financially ok etc.. But a company at 2/3 below book value is mind blowing. I have a few just about there..
Glen, I would really appreciate it if you would share some of those companies with the book values. People might appreciate that.
Richard,
Iamgold…Is one..
Thanks Glen!
Anytime al..
Glen, IAG is one ot the ones on my watchlist. I might add that they’re also one of the stocks on the Sprott’s new ETF.
Very solid company.. Fell hard from the 2011 top but tell me which long list of miners never did :). This is the type of mid/large cap company I like to invest in as they are a producer of nearly 1 million ounces per year. There cost are somewhat high but there so leveraged to the price of gold that when the price does go back up this miner will be the leader of the pack. Im actually looking at iamgold for a signle as it was one of the big boys to head down first. In 2008 it was one of the big boys to bottom first in october.. Coincidence? I think not.. That is why the bottom may be in very soon as early as first week of october. With thanksgiving the turn. Food for thought. These things are the things that one always remembers and goes along with readings and gut feelings from previous past.
Richard,
thanks for sharing that..Did not know. My only concern if you would like to take a stab at it or matthew or anyone else good with technicals is do you see 3 dollars on IAG us ticker being breached?
I believe, Al, Cory, and a few others called the bottom in gold a few days ago, when Al stated- perhaps it might be time to start looking at other investments other than gold, and everyone agreed with him.
SENTIMENT must be at rock bottom, if big Al is saying things like that.
On this forum, which I feel is the toughest group I have seen, there is no one as committed as before. Most people are either reluctant or bearish. This is not a normal selling by investors. The thin volume on silver trust proves it. Today is the only day we ge some volume since we have a new low.
Al, please bring Rick Rule on.
I agree, Lawrence. The opportunity to buy finally arrives and few do. Speculative silver juniors like IPT.V and AXU did not even make lower lows today. Both bottomed more than a week ago. Volume was unimpressive, especially where less retail money is currently positioned.
Today was definitely a day for at least SOME buying, and I did.
http://stockcharts.com/h-sc/ui?s=IPT.V&p=D&yr=0&mn=5&dy=0&id=p08645707883
I doubt any one will buy at low even so many people are talking about it. They will be too scared or don’t have enough time to buy much
Gold is falling: Time too buy because it is the bottom.
Gold is flat: Time to buy because it will take off any old day now.
Gold is rising: Time to buy. Hurry you fools. That smart money is taking us up again.
Gold sideways: Hold onto your positions. Don’t sell. It will come back.
Basically it is always time to buy according to the bulls and there are always reasons to criticize those who don’t. Funny how there is never a time to sell.
The reason why there is never a time to sell is because gold is not allowed to rise high enough to be worth selling. Same with silver. The market is rigged just like the Scottish referendum. Scotland Independence Vote Rigged
https://trutube.tv/video/28111/Scotland-Independence-Vote-Rigged
The only difference is that the market manipulators are protected by the system and are more sophisticated.
Ridiculous nonsense, Bird. You have never seen me comment that you should buy when everything is up or rising.
The more weakness, the more I buy; the more strength, the more I sell.
Thanks
SLW is down 7% this week and 22+% since its July high. Whether we look at intraday action or weekly closes, it was able to close the week above support. All things considered, I don’t think silver is going to fall apart. Therefore, SLW looks like a great deal. I didn’t buy any directly today, but I did get some through SIL and SGDM. I also picked up more GDXJ.
Yes, all can fall further, that’s why you scale in.
http://stockcharts.com/h-sc/ui?s=SLW&p=W&yr=3&mn=3&dy=0&id=p67125312262&a=368348153
I think we are in a bottoming process and have been buying stocks recently. Still a few hundredK yet in reserve, but before end of year I will be 100% in.
I am worried about the market crash which is coming possibly march/April next year as most probable date, but any black swan could set it off.
Watch this video and you will realize how much worse off we are prepared then the people who lived in 1933.http://dont-tread-on.me/?p=10120
Shanghai has closed when all the crashes happened. So I would not believe it has anything to do with them. SInce silver is way below production price and investors are not selling as before, the only serious possibility I would think is some one needs large amount of physical silver now and don’t worry about future. Look at the decline of silver price, it is too perfect. I would think it should happen when silver price is very high instead after 3.4 years’ liqudation.
Richard,doc,al,gary,rick
For what it’s worth another key indicator i’ve been looking at has been the gold/silver ratio.. My target as some of you know has been 78/80 region for quite sometime. Some in here could not except it. Today she spiked higher.
The odds look good for a 1180 bottom “tripple bottom” and silver 15 test final low. This gives us the 78/80 top gold/silver ratio confirmation i at least have been looking for.
Is it possible? Well who the heck knows.. I will be watching it for sure.
I would caution against jumping in too early. Gold is moving down into an extreme left translated intermediate bottom. Those don’t typically end until the horror just becomes unbearable. I think the odds are good gold breaks 1179 and heads toward 1050.
No one should even think about trying to pick a bottom before gold reaches the sub 1200 level. Next week should be the real panic phase of this daily cycle and then there may be one more cycle after that.
I think I can handle 1050. I loaded silver trust two days in a row
I do not believe there is much physical silver left in SLV.
I traded it a few times but don’t dare to touch it since it looks like final battle and JPM holds the physicAl. I usually buy central fund of Canada or sprott silver trust. I am sure they almost have 100% physical
1035 is where it took off from back in 2010 and that area is very possible.
I agree gary. Points well taken.
Discount on CEF now about 8%.
I calculated price to book for IAG currently at .43
Am now beginning to compute same for all my stock holdings.
ANV at .50 already. AEM was at 1.57. AUY at .86
It is interesting that PSLV traded at a discount to NAV around the lows of 2013 but has only traded at a premium this year. The last discount was on December 31st. The premium to NAV is in an uptrend and is currently 5.23%. With silver at a new low and so many investors so scared right now, where is this demand coming from? Obviously not the average retail investor.
CFS,
Be very careful with Allied Nevada (ANV). I’m sure you already know that they have a boatload of debt issues to deal with in short order. But with that 20 Million oz gold equivalent resource it very hard to not take a position.
With the gold price faltering for any extended period of time could be a death blow, or require an asset sale.
If the price of gold was at $1,400-$1,500 ANV would be a monster screaming buy.
Thanks for the heads up.
Other Data for ANV:
Gross Margin: 13.00%
EBIT Margin: 5.30%
EBITDA Margin: 21.40%
Pre-Tax Profit Margin: 14.60%
Profit Margin (Cont. Op): -2.11%
Profit Margin (Total Op): -2.11%
Management Effectiveness LTM 5 Yr Avg
Return on Equity -0.88% 4.74%
Return on Capital 1.98% 1.98%
Return on Assets 3.04% 3.04%
Price to Sales: 1.20
Price to Book: 0.50
Price to Tangible Book: 0.50
Price to Cash Flow: 8.40
Price to Free Cash: -2.00
You’re very welcome my friend. I gotta tell ya, if it wasn’t for the debt I would have a formidable position in that company for the long haul.
Much of it is going to ride on the gold price, its just that simple.
V
The data were for last year, of course, and gold has come down meaning the numbers are now worse.
I do like to see a positive Price to free cash ratio. (Means staying power)
Now here’s an interesting factoid onthe down day in silver on Friday 19 September 2014:
silver -3.9% gold -0.70% and copper +0.15%
Maybe that us an extreme, with, silver bugs really being flushed as we watch so maybe a tradeable bounce can come soon.
This is the opposite of the silver action at $30 and near to $50 where silver outperformed gold not the usual 1.5-2x but by 5 or even 6x on some days in late 2010 to early 2011. Now we are seeing the same action on the way down but inverted of course, silver underperforms gold by 5x. Maybe this is ultimately bullish for bottom fishers but the 5x outperformance started a way before the price top on the way up, maybe around $30 and well as near $50 at the very peak – so 5x underperfoamce is not proof of a bottom presumably.
Bob Hoye has previously said he thought that Au:Ag ratio could go to 100 on the next credit crisis. So far it topped at 84 in late 2008 Au $680 and Ag $8.40.
Peter L Brandt on the kereport show last weekend who talked about possible silver low $13 and gold at $1000 (Au:Ag ratio was be 77, sounds feasible) said silver is mainly an industrial metal but this Friday it really underperformed copper!
It is thereofe clear that the bugs are getting squashed in silver because it has underperformed both industrial metals (Cu Ni Al Zn Pb ) and precious metals (Au, Pt, Pd and Rh) with the 2nd worst being palladium at -2.2% on Friday and that was in a mini-bubble lately.
The Au:Ag ratio actually hit 96 in October, 2008, and almost 106 in 1991.
http://stockcharts.com/h-sc/ui?s=$GOLD:$SILVER&p=M&st=1983-09-20&en=today&id=p71256725931
But Cu, Zn and Pb are all up.