PSLV silver premium analysis

Today I fabricated a nice chart of the PSLV price (Right Y-axis) and the PSLV premium (Left Y-axis) from the beginning of 2011 till today.

I calculated this as follows:

I first calculated a standardization coefficient based on the premium, price of PSLV and SLV of 30 December 2011. The standardization coefficient was 2.55 (30 December 2011) and 2.5 (5 January 2012). If I had the historical premiums I could make an average standardization coefficient. The problem is that I don't have the data for historical premiums of PSLV... 

So we'll just go with this premium here to calculate Stand. coefficient (30 December 2011):

                                                   SLV price 

Stand. coefficient = --------------------------------------------------------                                     

                              (PSLV price / (1+ PSLV premium*0,01))

 = 26.94 / (13.43/(1+ 27*0.01)) = 2.55     

Based on this coefficient I calculated the PSLV premium to spot price with this formula:

PSLV Premium = ((PSLV price * Coefficient ) / SLV price) -1 

Then I plotted this PSLV price /PSLV premium chart in function of time for 2011.

PSLV premium (%) and Price (USD) in function of time (coefficient 2,5)

PSLV premium (%) and Price (USD) in function of time (coefficient 2,55)

As you can see there is a correlation between the PSLV price and the PSLV premium. When the premium goes up (blue squares), then the PSLV price follows a few days later (orange diamonds).

So the premium of PSLV is a good indication to know if the spot silver price will go up or down. When the PSLV premium goes up, then the PSLV price (and also the spot silver price) will go up a few days later and vice versa. Also note that the premium trend is going up, which is a bullish sign for silver.

Conclusion: Always watch what the premium is doing. The latest days the premium shot up to 30%, which means in the future we will see a huge price spike. Let's see if my predictions are correct. :-)

Marc Faber - Slovenia Conference (2009)

This is an old video from the 2009 Slovenia conference, but an all important one. Marc faber talks about the macro-economy in a global market. He will talk about economic cycles, commodities, bonds, real estate, emerging markets, gold and war. As debts are skyrocketing it becomes increasingly clear that gold is the only safe haven.

Abstract:

- We are in the up move of the Kondratieff cycle

- Bonds are the worst investment

- Asia has all the money

- US trade deficit will become hyperinflationary

- Emerging markets will consume more

- Gold is a safe haven

- War is coming

- Commodities will become scarce

Cash is Trash

This one is a classic Robert Kiyosaki Video from 2008 where he is preaching his famous quote:

"Cash is Trash"

And rightly so...

PSLV premium soaring

Today the premium for PSLV soared to its all time high of 30% to spot price.

Why on earth would someone pay a 30% premium to spot price? Yes, exactly because the physical silver is much safer as the paper silver. It just shows that physical and paper silver are decoupling. It also shows that physical silver will soon lead the market price of silver. People buy at these high prices because they see silver prices going up in the future.

I'm also recently keeping an Excel file with the price of PSLV/PHYS together with the premium of PSLV/PHYS over time. Let's see which correlation I can deduct from these numbers.

You can find the premiums on the Eric Sprott sites:
PHYS premium
PSLV premium

Greece wants to default

Greece wants out. But the only way to do that is to default in a big way by devaluing their currency.

If it does happen though, we will see massive losses on bank's balance sheets and we will see a cascade effect to neighbouring countries like Italy, Spain, Portugal and Ireland.

It will be good for the euro though, because we don't have to keep supporting the Greece people anymore.

Economic Disasters

The economy will ultimately be influenced by disasters. As we start off 2012, the year of the end of the world, let's start monitoring the disasters of this world.

In Januari most notable are:
- Dead black birds in America Arkansas (possibly fireworks)
- Dead fish in Norway Troms
- Volcano anomaly in Germany Laacher See (which could really be the end of Europe if the volcano errupts)

RSOE EDIS Radio Distress-Signalling and Infocommunications