Precious Metals Forum

Go Back   Precious Metals Forum > Precious Metals and Economic News > Silver Bug

Like Tree7Likes
  • 1 Post By jd1123
  • 1 Post By ancona
  • 3 Post By benjamen
  • 2 Post By swissaustrian

Reply
 
LinkBack Thread Tools
Old 05-05-2012, 08:06 AM   #1
Yellow Jacket
 
Join Date: Oct 2011
Posts: 2,053
Liked: 925 times
Lightbulb [Chart] long-term silver-copper correlation is intensifying

Below is a chart showing that the long-term silver-copper correlation is intensifying while the silver-gold correlation stayed flat with less volatility. This is a sign of the industrialization of silver imho. During economic downturns (2002/03, 2008/09, [2012/13??]) the correlation to copper loosened at bit, though.
I got the chart from this presentation (slide 6):
http://www.silverinstitute.org/site/...ver-market.pdf

swissaustrian is offline   Reply With Quote
Old 05-05-2012, 10:23 AM   #2
Fly on the wall
 
Join Date: Mar 2012
Posts: 36
Liked: 10 times
Interesting chart swissaustrian. I was reading about another explanation for the intensifying correlations (cant find the article). Because there is no yield in many assets (money markets, bonds, etc), other hard assets such as gold, silver and equities all intensify in correlation as people with lots of cash on hand look to invest it. When there is a deleveraging, all assets get hit hard. Furthermore, there are more vehicles to invest in alternative assets (hedge funds, ETFs etc) causing things to rise and fall in more unison.

Just an alternative explanation for the chart, one that I found to be interesting. Thanks for the great info.
swissaustrian likes this.
jd1123 is offline   Reply With Quote
Old 05-05-2012, 10:52 AM   #3
Yellow Jacket
 
ancona's Avatar
 
Join Date: Nov 2011
Location: Waaay south
Posts: 3,370
Liked: 2046 times
JD,
Remember the cataclysmic collapse in metals a few years ago? I sure do! I lost my ass on a project because the bottom fell out from under metals before I had a chance to dismantle a large industrial structure. Had I held on till the panicked population saw the wisdom in holding commodities over paper, I may have broken even, but I panicked right along with them.

You are absolutely right about deleveraging. There is so much leverage out there that when the shit hits the fan, the first things to get dumped are physical metals and metal futures, collapsing prices. This time however, I will be a big buyer at the bottom.
BigJim likes this.
__________________
All things being equal, the simplest answer is quite often the correct answer - Occam
ancona is offline   Reply With Quote
Old 05-05-2012, 12:32 PM   #4
Yellow Jacket
 
Join Date: Oct 2011
Posts: 2,053
Liked: 925 times
In terms of leverage in metals. This is not like 2008 all over again, at least not for gold and silver. When silver dropped from $21 to $8, there was immense speculation. This time, the market has already been cleared since the top in May 2011:


The gold market looks similar:


Copper speculation/leverage is quite different from pms, levels are currently pretty high:
swissaustrian is offline   Reply With Quote
Old 05-05-2012, 01:21 PM   #5
Yellow Jacket
 
ancona's Avatar
 
Join Date: Nov 2011
Location: Waaay south
Posts: 3,370
Liked: 2046 times
HELP!!!!

I'm not a TA guy, so I count on [you] SA to help me understand what I'm looking at! These are pretty charts to be sure, but they are just Chinese arithmetic to me.
__________________
All things being equal, the simplest answer is quite often the correct answer - Occam
ancona is offline   Reply With Quote
Old 05-05-2012, 01:26 PM   #6
Super Moderator
 
benjamen's Avatar
 
Join Date: Mar 2012
Location: Migratory
Posts: 1,620
Liked: 685 times
I am not an expert, but I will take a crack at it.

Blue lines are a measure of people betting against the metal.
Red lines are a measure of people betting for the metal.

Green lines are a measure of the difference between red and blue and shows the level of paper investment action going on in the market. The levels are much lower right now for gold and silver than they were in 2011, so there isn't as much risk of money flooding out the paper markets simply because there is less money in there right now.
PMBug, swissaustrian and ancona like this.
__________________
I drive men mad
For love of me,
Easily beaten,
Never free.

PMBug 101 *** Forum Rules
benjamen is offline   Reply With Quote
Old 05-05-2012, 02:24 PM   #7
Yellow Jacket
 
Join Date: Oct 2011
Posts: 2,053
Liked: 925 times
Originally Posted by ancona View Post:
HELP!!!!

I'm not a TA guy, so I count on [you] SA to help me understand what I'm looking at! These are pretty charts to be sure, but they are just Chinese arithmetic to me.
benjamen basicly said this already.
These charts show the outstanding amout of futures and options on silver, gold an copper, so called open interest (http://www.pmbug.com/forum/f13/open-...ld-silver-679/ ), in the non-commercial category (i.e. speculation, as opposed to hedging).
Silver and gold speculation is at very low levels, especially compared to 2008 when the bottom fell out of the metals when financial markets in general crashed big time. Therefore I don't expect a forced selloff due to deleveraging like in 2008 if we get another 2008 type collapse.
The situation is totally different for copper, however: Copper speculators are pretty active, i.e. there is plenty of leverage in the copper market right now.
PMBug and ancona like this.
swissaustrian is offline   Reply With Quote
Old 04-17-2013, 11:19 AM   #8
Yellow Jacket
 
Join Date: Oct 2011
Posts: 2,053
Liked: 925 times
Given the weakness of the copper market and the correlation between copper and silver, more trouble might be ahead for silver. We might see a diversion between gold and silver like in 2008. This would only last for a short period of time, however, as silver is already trading below production cost.
swissaustrian is offline   Reply With Quote
Reply

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On


Similar Threads
Thread Thread Starter Forum Replies Last Post
Long term food storage PMBug BSTS 38 07-09-2012 08:47 AM
Long Term Food - prepper_momma_71 BSTS 8 04-16-2012 07:51 PM
Long term View of the Gold/Silver ratio PMBug PM Bug 6 03-02-2012 10:23 AM
Silver chart ancona Silver Bug 3 02-02-2012 02:51 PM
Gold is still undervalued in relation to the US monetary base (M0) [long term chart] swissaustrian Gold Bug 5 01-08-2012 07:05 PM


All times are GMT -5. The time now is 01:10 AM.


Powered by vBulletin® from Jelsoft Enterprises Ltd.
Content Relevant URLs by vBSEO 3.6.0 PL2 ©2011, Crawlability, Inc.
Content of PMBug.com copyright © 2011 - 2019 Measuring Up. All Rights Reserved.