Post by jeffolie on Dec 24, 2012 13:04:53 GMT -6
Silver declined because:
1. industrial demand is declining
2. the investment expectations for inflation have declined
1. industrial demand is declining
For comparison, examine another industrial metal widely observed as a leading indicator of the economy: Copper
www.zerohedge.com/news/2012-12-24/whos-smarter-dr-copper-or-mr-market
... Who's Smarter? Dr. Copper Or Mr. Market 12/24/2012
Copper is often referred to as the PhD of commodities for, as JPMorgan's Ken Landon notes, "When companies ramp up production of various products, whether during or in anticipation of economic recovery, they demand more cooper." Gold, however, he adds, "is not sensitive at all to business-cycle demand. Its price is driven by the monetary environment." While Bloomberg's chart of the day prefers to take the short-term (last few weeks) view of the world to justify a bullish equity market call, we prefer to look at longer-term cycles and the message is extremely clear - manufacturers are anything but confident, are doing anything but buying copper in anticipation of demand, and despite gold's recent fluctuations it is anything but implying that the world's grand monetary policy experiment is slowing down. What we see from this chart is yet another clear fundamental divergence between Dr. Copper's take on the global economy and the US equity market's nominal recovery.
www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12/20121224_copper.jpg
Chart: Bloomberg
my jeffolie view: The variable industrial demand for silver remains solar panel manufacturing. China's huge industrial use of silver in making solar panels now selling at levels less supported by political tax credits in many countries has declined. The politics of China to keep employed the solar panel workers and profits for Communist Party local 'officials' from continued production of solar panels has resulted in an on paper plan to expand solar panel use domestically inside China to replace the political collapsing support for solar panels in Europe and America.
2. the investment expectations for inflation have declined
Investment expectations for inflation declined because the govt's lying headline inflation numbers continue to show almost no inflation in America and Europe.
1. industrial demand is declining
2. the investment expectations for inflation have declined
1. industrial demand is declining
For comparison, examine another industrial metal widely observed as a leading indicator of the economy: Copper
www.zerohedge.com/news/2012-12-24/whos-smarter-dr-copper-or-mr-market
... Who's Smarter? Dr. Copper Or Mr. Market 12/24/2012
Copper is often referred to as the PhD of commodities for, as JPMorgan's Ken Landon notes, "When companies ramp up production of various products, whether during or in anticipation of economic recovery, they demand more cooper." Gold, however, he adds, "is not sensitive at all to business-cycle demand. Its price is driven by the monetary environment." While Bloomberg's chart of the day prefers to take the short-term (last few weeks) view of the world to justify a bullish equity market call, we prefer to look at longer-term cycles and the message is extremely clear - manufacturers are anything but confident, are doing anything but buying copper in anticipation of demand, and despite gold's recent fluctuations it is anything but implying that the world's grand monetary policy experiment is slowing down. What we see from this chart is yet another clear fundamental divergence between Dr. Copper's take on the global economy and the US equity market's nominal recovery.
www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/12/20121224_copper.jpg
Chart: Bloomberg
my jeffolie view: The variable industrial demand for silver remains solar panel manufacturing. China's huge industrial use of silver in making solar panels now selling at levels less supported by political tax credits in many countries has declined. The politics of China to keep employed the solar panel workers and profits for Communist Party local 'officials' from continued production of solar panels has resulted in an on paper plan to expand solar panel use domestically inside China to replace the political collapsing support for solar panels in Europe and America.
2. the investment expectations for inflation have declined
Investment expectations for inflation declined because the govt's lying headline inflation numbers continue to show almost no inflation in America and Europe.