Month: November 2012

Unemployment: Getting Worse in Europe

Posted by

0

Today, the unemployment number for Italy was released at 11.1% in October 2012. The number is very big, but the slope at which the unemployment is increasing in Italy is even more concerning. See Chart 1.

It is not getting better in Europe, only worse. Also France and the Netherlands are doing worse and worse.
Our country Belgium is actually doing very well as is Germany.

Chart 1: PIGS Unemployment

Dow Gold Ratio closing down

Posted by

0

A little reminder on the Dow-gold ratio (Chart 1). We see that the Dow has underperformed gold recently. And it looks like the trend could keep going down, which is consistent with my bullish view on precious metals.

Chart 1: Dow Gold Ratio

Also very consistent with my bullish view on silver, we see the gold silver ratio (Chart 2) go down as well. It’s strikingly similar with the Dow-gold ratio.
Chart 2: Gold Silver Ratio

And finally, we see that platinum hasn’t had its rise yet against gold. So buying platinum is still a very good deal (Chart 3).

Chart 3: Platinum Gold Ratio

Why are the silver lease rates flat at Kitco?

Posted by

0

At last we know the reason why the lease rates for silver were flat for so long (and still are). James Turk told us just recently that the LBMA (London Bullion Market Association) is no longer reporting silver interest rates and silver forward rates.

As you know, the lease rate is LIBOR minus GOFO and the same applies for silver. If they don’t report the silver forward rates, you can’t get the lease rate anymore, because we lost a parameter of the equation. James Turk says that the LBMA is underreporting on the silver forward rate. It’s reporting contango, but actually it should be in backwardation. When gold and silver are in backwardation, that means we will have high probability of getting inflation.

That’s what I’m making of this, unless there is someone who can give another explanation for the flat curve here:

Chart 1: Silver Lease Rate

Luckily, we still have the gold GOFO and gold lease rates. The GOFO is still in contango (3 month GOFO = 0.42%). So we just use those to “assume” silver forward rate … If we do get a spike down in GOFO, then severe backwardation could show up.

One thing is certain. If gold lease rates go up, the GOFO goes down and that means the gold goes in backwardation. And that also means that silver is going in backwardation. That ultimately means that you should buy silver when silver lease rates go up.

If this event of the LBMA isn’t a reason to buy silver, I don’t know what is.

And finally, isn’t it a coincidence that the silver priced started to move up just when the curve went flat (Chart 1)?

Stocks will underperform

Posted by

2

I found a very good macroeconomic site named Eureka Report (Kohler’s Graphs) which basically monitors global economic trends. I couldn’t resist to show one of them here.

As I pointed before, equities have outperformed many other assets the last months and this can also be seen on Chart 1. There is a correlation between equity prices and the earnings per share revisions. The last couple of months we saw a decoupling between the two. 
It is my prediction that global equities will therefore continue to underperform other assets in the coming months.

Chart 1: Equities Vs. EPS (Kohler’s Graphs)