woensdag 5 september 2012

CME adds Silver Stock Depository: CNT DEPOSITORY, INC.


Today the CNT Depository has been added to the already existing warehouse stock depositories at the COMEX (CME): Brink's, J.P. Morgan Chase Bank, Scotia Mocatta, HSBC Bank, Delaware Depository. The CNT Depository is located at 722 Bedford St., Bridgewater, MA. CNT, Inc. began as a small numismatic business in 1973. Since that time they have grown into the largest privately owned company in the precious metals industry. CNT, Inc. has an annual net revenue of $8 Billion in 2011. Other than silver, the company also distributes platinum, palladium and gold.

The initial amount of silver currently deposited is from the eligible class and is in the amount of 631389 troy ounce or 0.4% of the total silver stock at the COMEX. This amount is so small that there shouldn't be any effect at all on the other competing depositories.

Investors have an extra alternative at hand now to store their physical silver (SLV) bullion.

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As for the silver warehouse stock level at the COMEX (Chart 1), it has been in a rising trend since August 2012, which possibly means there is a temporary declining demand in silver.

Silver lease rates (Chart 2) have been declining sharply and investors need to watch out for a spike in lease rates, which accompanies a drop in the price of silver.

I advise investors to at least put a stop limit in silver in case the silver price plunges.

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Chart 2: Silver Lease Rates

The reason why I anticipate a correction in the silver price is because technically, the silver price is overbought, with the MACD topping out for the 1 year silver chart (Chart 3).

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As for the long/short positions in silver, we noted that the LCNS level has increased quite a bit, indicating higher silver prices in the future as I pointed out in this article.

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Last but not least, the premium on silver has been rising slowly and based on historic correlations, this is bullish for the price of silver (Chart 5).

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Chart 5: Sprott Physical Silver (PSLV) Premium

Conclusion:
Overall I'm bullish on the silver price considering the macroeconomic indicators of rising debt, extra QE stimulus, rising unemployment. But the short term technical indicators point to a possible short term correction. It's advisable that investors put a stop limit on their silver positions in case of a plunge in the silver price.

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