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Albert Sung is the author of the Katchum Macro-Economic Blog, monitoring breaking economic news from 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... More
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  • Monitoring The Decoupling In Paper Silver Versus Physical Silver 2 comments
    Nov 5, 2012 3:36 PM | about stocks: SLV, PSLV

    With the current suppression of silver I think it's time to monitor the premium to see if a real shortage is actually building up.

    One of the best ways is to use the Engelhard bullion price, which can be found here:

    http://apps.catalysts.basf.com/apps/eibprices/mp/

    Table 1: Engelhard Industrial Bullion Prices

    I have subtracted the Engelhard silver bullion price by the spot silver price and then divided the result by the spot silver price to get a percentage. I have bad news. The premium is trending down. This means there isn't really a problem with supply or any sign of decoupling.

    (click to enlarge)

    Chart 1: Silver Premium Engelhard bullion to spot silver

    If there were a problem with supply or a decoupling between physical and paper silver, the chart would be more like this:

    Chart 2: Spot Silver Premium

    I'll continue monitoring this so that investors can have the breaking news when the premium starts going up.

    Disclosure: I am long PSLV.

    Stocks: SLV, PSLV
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Comments (2)
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  • waikikigigi
    , contributor
    Comments (13) | Send Message
     
    can you please advise if PSLV orSLV is a best buy right now?
    5 Nov 2012, 05:19 PM Reply Like
  • Katchum
    , contributor
    Comments (613) | Send Message
     
    Author’s reply » PSLV has a pretty low premium of 4% right now, so I don't see a problem to buy PSLV. The premium is worth it, considering the risk of paper silver.
    5 Nov 2012, 05:26 PM Reply Like
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