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Katchum
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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
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Correlation Economics
  • Demand For Silver Going Up In China 6 comments
    Dec 31, 2013 5:38 AM | about stocks: SLV, GLD

    If you have read this post, you will know that the Shanghai premiums to London gold prices are a proxy for higher demand for gold in China. Because when the premium shoots up, the demand in Shanghai shoots up too. Compare the two charts yourself. (Second chart below is courtesy of Koos Jansen, In Gold We Trust, original link)

    Now, we can also do the same for silver. Look at the silver premium chart between Shanghai and London below. I do not even need to know how much the Chinese demand is for silver, because the silver premiums speak for themselves. We call this "the power of deduction".

    And these peaks in silver premiums magically coincide with a drainage in the SLV trust. Let's see what happens next, will SLV be drained too in the same manner as GLD?

    Stocks: SLV, GLD
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Comments (6)
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  • Russ Winter
    , contributor
    Comments (648) | Send Message
     
    Perhaps the cost of fabricating and shipping 100 oz silver bars of silver isn't quite as lucrative as gold bars?
    4 Jan, 09:19 AM Reply Like
  • Katchum
    , contributor
    Comments (531) | Send Message
     
    Author’s reply » I haven't even thought about that. What would the premium need to be before shipping becomes profitable? That will be the point where we'll see the depletion in SLV.
    4 Jan, 09:28 AM Reply Like
  • Katchum
    , contributor
    Comments (531) | Send Message
     
    Author’s reply » I have done some calculations and it seems profitable if I only include shipping costs. http://seekingalpha.co...
    4 Jan, 11:07 AM Reply Like
  • Itinerant
    , contributor
    Comments (877) | Send Message
     
    "And these peaks in silver premiums magically coincide with a drainage in the SLV trust."

     

    Sorry, but I cannot see any drainage in the SLV trust in the last diagram. All I see is a sideways move at a very high level. Care to clarify?
    4 Jan, 05:42 PM Reply Like
  • Katchum
    , contributor
    Comments (531) | Send Message
     
    Author’s reply » It's about the two little tops on the last chart red line. It's sideways movement, but you can see it dips a little bit.
    5 Jan, 04:32 AM Reply Like
  • Itinerant
    , contributor
    Comments (877) | Send Message
     
    sorry, but all I see is higher lows... and noise.
    5 Jan, 06:25 AM Reply Like
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