The prices of the metals rose a bit this quiet, holiday week. Merry Christmas!
Speaking of Christmas, Keith’s brother who is an amateur woodworker of growing skill, gave him this present on Friday.
Regular readers may recognize the design as our logo. Each “M” is made of a single piece of wood. They are stained or painted in the correct colors. The minute hand is silver and the hour hand is gold (paint, alas!) It now occupies a prominent place in the office 🙂
It is worth taking this time to review something that, based on some reader comments, may be the source of some confusion. The Monetary Metals fundamental price is measuring just that, the fundamentals. As with stocks or any other asset, our centrally banked, government-distorted markets can experience price volatility and even prices that deviate from the fundamentals for a long period of time. Just because we have been calculating a fundamental price for gold that is well over a hundred bucks above the market price, does not mean that the market price has to spike up $100 tomorrow morning. It might—and we certainly would not short gold when the market is in such a state. But as the market has proven since August, it might remain depressed for quite a while.
We have one other comment on this topic. For the longest time, we were calling for the silver price to drop sharply. It stubbornly did not, or when it did drop it would soon recover. We received some hate mail, and a lot more skepticism. In the end, it turned out that we were right and all the silver bulls were wrong. The silver price hit our lowest target, with a 13 handle.
We will continue to show our data, discuss our theory, and call ‘em like we see ‘em. Speaking of which, read on for the only true look at the fundamentals of gold and silver…
But first, here’s the graph of the metals’ prices.
The Prices of Gold and Silver
We are interested in the changing equilibrium created when some market participants are accumulating hoards and others are dishoarding. Of course, what makes it exciting is that speculators can (temporarily) exaggerate or fight against the trend. The speculators are often acting on rumors, technical analysis, or partial data about flows into or out of one corner of the market. That kind of information can’t tell them whether the globe, on net, is hoarding or dishoarding.
