Yields in silver, update

Continuing the "value of the value of a bond" series (May, June) … Behold! We've hit the purple line.

My best guess is we linger around the top of the channel a little longer, then shoot for the blue line.


Warren James said...

So the price of metals seems chained to derivatives/interest rates. Seems pretty obvious to me now that $1550 in gold and $36.50 in silver is some kind of 'balancing point' in respect to derivatives for this time period (mysteriously somehow), but it would be nice to get some insight into the next plateau area. Still a mystery to me how Silver is so correlated to UST as per your graph.

Anyway, my buying as per my previous comment worked out well for me as it turned out to be a dip in Gold AUD - I'm feeling comfortably smug :)

Louis Cypher said...

One thing I have been paying attention to is this classic chart

If $50 is the high and we are in a dead cat bounce then that would mean we will hit $38.50 ish in Silver and then get our asses handed to us.
I am thinking of taking a short position there for insurance.
If you guys haven't read Armstrong's latest;
it's a doozy.

GM Jenkins said...

Warren - it's going to be interesting to watch if hitting the top of that purple trend channel really marks the end of this silver correction too. Then I'll really think I'm on to something. So far so good. Re: gold in AUD and Euros, I should update those charts from two weeks ago - they look really bullish to me, since long term trend lines held. Gold looks due for overshooting an upper trend line - that hasn't happened since 2009 in AUD and USD.

Louis - that chart is scary because it looks a lot like the silver (non log) chart going back like 5 or 6 years. If you superimpose the two charts, and silver follows the classic bubble, it would probably overshoot in the "despair"stage down to 20 or so. But on that note, James Dines on KWN made a good point on an interview that silver around the world is money much the same way that gold is, and the industrial aspect doesn't detract from that, but rather makes it more valuable. So whatever the "equilibrium" ratio is btwn the two (if that concept even makes sense) it's unlikely silver is in a bubble if gold is not, and gold doesn't look like your classic chart much at all. Another good point Jim Rogers recently made is, you'll know gold is in a true bubble when people are lined up to buy gold not sell it.

The Armstrong piece is truly disquieting - i just hope Paulson reads it too. Then again he is a Goldman guy and you gotta imagine he's thought of that. Same with an Einhorn of Greenlight capital, thes world series of poker dude - are these guys gona let themselves get checkmated liek that?

Louis Cypher said...

The Armstrong piece is pretty scary in it's honesty. His book should be pretty interesting. As for that chart it could be argued that one was painted as I can find nothing like it except when the public was buying during the Hunt bros run.
The run from 41 was met with zero resistance. But that is just conjecture on my part.
More conjecture .... Is Sprott the new Hunt Bros. but a willing participant in that game?