zaterdag 18 augustus 2012

Silver Inventories at CME and Lease Rates

Just a few weeks after I turned bullish on silver, articles are sprouting out of nowhere about silver inventories being historically low.

However, I see signs of a temporary weakness in silver.

1) The silver stocks at the CME aren't actually going down anymore. They are going upwards (Chart 1).

Chart 1: Silver Stocks CME
2) The silver lease rates are actually going down, instead of going up. Historically, when silver lease rates plunge, the price of silver will go down a few months later.

Chart 2: Silver Lease Rate
Conclusion: I would be wary about the price of silver. If this trend continues this way, look out below!

2 opmerkingen:

  1. Its quite difficult to predict how markets will behave based on historic data. In your last post about silver when you predicted the price would increase above $30/oz, it went down to $27/oz. In this post, you thought the market was weak, but the price increased from $28/oz to over $31/oz.

    What actually happened was the market's expecations changed: the possibility that fiscal or monetary stimulus programmes would be announced in China, Europe or the US seem to have prompted investors to buy silver as a hedge against inflation.

    However, at the time of writing, no stimulus packages have been announced, and the price of silver seems to be slowly drifting downwards again.

  2. That's right, we can't predict it, we can just state the evidence and try to speculate on that. If China or the U.S. suddenly does QE of 1 trillion dollars, then you know to act on it.