Silver Prices Decouple Between Asia and Western World

Andrew Maguire on King World News reveals a shocking truth about the dislocation of silver prices between Asia and London. I already warned in February 2012 that prices between Asia and the Western world would diverge from each other and that manipulation of prices in the U.S. and London will end because of the emergence of Asia and their Shanghai Metals Market, which just recently started trading in silver (in April 2012).

Now, finally, the decoupling is happening and this should be an eye opener for everyone.

Apparently, silver traded at $29.61/ounce in London, while it traded at $32.50/ounce in Shanghai. That's a premium of 10% over London Spot Price. When the market closed it still traded at around 4% premium.

Of course there could be price disruptions between the two markets because of domestic spot trading. But 10% is a bit over it. Ultimately it's Shanghai that will win, because their exchange is backed by the real thing, while the COMEX is backed by nothing.

I would like to monitor this premium, but I can't find live quotes anywhere on the internet (which are free of charge). If I could monitor this premium divergence, it could be a tool to predict if the price of silver will go up or down.

Yet another day of decoupling

Today is another day of decoupling:

USD/EUR: -0.2%

U.S. bonds: -2%

Stocks: -0.5%

It's getting more obvious day by day.

Chart 1: Monitoring of Decoupling

Intermezzo:
I also got news from our Belgian government today that wages will be frozen for 2 years and minimum wages would go up by 150 dollars/month.

This will have impact:
1) minimum wage earners will get fired
2) efficiency at work will go down because there is no reason to work hard with frozen wages
3) people will search for another job to get higher wages

We have the worst government ever...

Another day of decoupling

Lately, we didn't see much of a decoupling, but today we have another day of decoupling.

Stocks went down 0.5% with the S&P going to 1368.
The dollar went down 0.32% to 1.2743.
10 year bonds went down 0.42% to 1.6012.

Only thing going up is oil, gold and silver.

Peter Schiff talking about Fiscal Cliff and Decoupling

When you speak of the devil... After several days of my publication of the decoupling theory, Peter Schiff put up a video talking about the fiscal cliff and about the decoupling of the Asian and Western economies.

Always a great report to follow.

Marc Faber confirming shift from West to East

If you recalled my "the decoupling has started" article. I mentioned that Marc Faber tells us that money will go wherever it wants.

Now Marc confirms himself that the Asian stock market could have a rebound as opposed to the U.S. stock market. The obvious reason be that the Asian stock market has underperformed the U.S. stock market by and large.

He also doesn't anticipate a collapse in the stock market and real estate market because of money printing.

Stock - Cash - Bond Decoupling Has Started

As Marc Faber famously stated: "You can print money, but you can't control where the money will flow into." This is the most important line that investors need to keep in mind when we are talking about decoupling.

Since Ben Bernanke announced QE3 on September 13, 2012, we all know money is going to be created out of thin air. We just don't know where the money will flow into eventually, we can only observe.


As you may know, I started monitoring the correlation between stocks, bonds and cash since June 4th, 2012. Peter Schiff forecasted that once the decoupling started (meaning that stocks and cash drop at the same time), then the bond market would plunge. (Normally the U.S. dollar would strengthen when stock markets drop.)

Since a month now, the decoupling has started to emerge (Chart 0). As you can see the green, red and blue dots are all trending down since a month.

Chart 0: Decoupling between Stocks - Bonds - Cash

To see what this decoupling actually means for you, go here.

Biggest drop in U.S. bonds in 2 months

A little update on the decoupling experiment I started 2 months ago. I wanted to see if the S&P could decline together with a decline in U.S. bonds and the U.S. dollar. This would mean each graph (red, green, blue) on chart 1 would go down. It hasn't started doing that yet.

What I did want to take note of is the big decline in U.S. bonds (green graph). On Friday 3 August, 10 year U.S. bond yields spiked to a 1.563% yield. This is almost a 10 basispoints rise in yield. Probably people are worried about the massive U.S. debt, which went to a record 15.933 trillion dollars from 14.8 trillion dollars a few weeks earlier.

The debt ceiling of 16.3 trillion (to be heightened to 16.7 trillion) is near. I predict this debt will go up even faster because no QE3 has been implemented, which means yields will go up and as a consequence interest payments on debt will go up as well.

Chart 1: Monitoring of decoubling USD vs. bonds vs. stocks