Wednesday, April 20, 2011

Silver to Aluminum Price Ratio v.4


See Also:
Silver to Aluminum Price Ratio
Silver to Aluminum Price Ratio v.2
Silver to Aluminum Price Ratio v.3

Source Data:
USGS: Historical Mineral Prices
Kitco: Spot Silver Price
Kitco: Spot Aluminum Price


Mr Slippery said...

Ah, conversation turns back to silver. I love silver as a metal, but I am as baffled as anyone over the vertical lift.

Jesse postulates some untold story driving the price. Here is an attempt at explanation based on supply/demand from Eric Sprott who runs a couple of precious metal ETFs:

I think his point is that there is a lot of money flowing into silver, but the available "investment" silver is small compared to total market that includes industrial uses.

I can make a case for monetary gold because all the monetizers still carry it on their balance sheets. That argument does not hold for silver. Central banks don't have any.

There is the long running rumor of the massive JPM and HSBC short positions. Maybe there is something there, or maybe those shorts are on behalf of clients.

The bottom line is I don't know. I've been selling into it since $40 but I am down to what I consider my core and don't really want to sell more. However, at some price, I would start selling again. Greed. Fear. Greed. Fear.

Maybe I'll sell all of it and buy nickels.

Stagflationary Mark said...

Mr Slippery,

I think silver is a fear AND greed trade, just like it was in the late 1970s.

You have the fear that the dollar is worthless. That can push the price of silver to infinity.

You have the greed that you are riding the parabolic beast and tons of investors will surely follow you. Silver is a small market. It doesn't take much.

It won't end well for silver bugs if I am right of course. I can't say that it will fall in nominal terms, but if you are using silver as a hedge against rising aluminum foil prices long-term then I strongly suspect hindsight will someday pop your bubble.