Seeking Alpha

Katchum's  Instablog

Katchum
Send Message
Albert Sung is the author of Correlation Economics, monitoring breaking economic news on a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at Ashland, a... More
My blog:
Correlation Economics
  • Silver Update: CME Adds Silver Stock Depository CNT DEPOSITORY, INC.  0 comments
    Sep 6, 2012 11:12 AM | about stocks: PSLV, SLV, CME

    Today the CNT Depository has been added to the already existing warehouse stock depositories at the COMEX (CME): Brink's, J.P. Morgan Chase Bank, Scotia Mocatta, HSBC Bank, Delaware Depository. The CNT Depository is located at 722 Bedford St., Bridgewater, MA. CNT, Inc. began as a small numismatic business in 1973. Since that time they have grown into the largest privately owned company in the precious metals industry. CNT, Inc. has an annual net revenue of $8 Billion in 2011. Other than silver, the company also distributes platinum, palladium and gold.

    The initial amount of silver currently deposited is from the eligible class and is in the amount of 631389 troy ounce or 0.4% of the total silver stock at the COMEX. This amount is so small that there shouldn't be any effect at all on the other competing depositories.

    Investors have an extra alternative at hand now to store their physical silver (SLV) bullion.

    (click to enlarge)

    Chart 1: Silver Stocks CME

    As for the silver warehouse stock level at the COMEX (Chart 1), it has been in a rising trend since August 2012, which possibly means there is a temporary declining demand in silver.

    Silver lease rates (Chart 2) have been declining sharply and investors need to watch out for a spike in lease rates, which accompanies a drop in the price of silver.

    I advise investors to at least put a stop limit in silver in case the silver price plunges.

    (click to enlarge)

    Chart 2: Silver Lease Rates

    The reason why I anticipate a correction in the silver price is because technically, silver is overbought, with the MACD topping out for the 1 year silver chart (Chart 3).

    (click to enlarge)

    Chart 3: Silver Price

    As for the long/short positions in silver, we noted that the LCNS level has increased quite a bit, indicating a higher silver price in the future as I pointed out in this article.

    (click to enlarge)

    Chart 4: Silver LCNS (Got Gold Report)

    Last but not least, the premium on silver has been rising slowly and based on historic correlations, this is bullish for the price of silver (Chart 5).

     

     

    (click to enlarge)
    Chart 5: Sprott Physical Silver (PSLV) Premium

    Conclusion:

    Overall I'm bullish on the silver price considering the macroeconomic indicators of rising debt, extra QE stimulus, rising unemployment. But the short term technical indicators point to a possible short term correction. It's advisable that investors put a stop limit on their silver positions in case of a plunge in the silver price.

    Disclosure: I am long PSLV, AGQ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Themes: gold-and-precious-metals Stocks: PSLV, SLV, CME
Back To Katchum's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.