Correlation Economics Backup

A new report shows that silver is still in deficit. This will support silver prices. https://www.silverinstitute.org/site/2015/11/17/thomson-reuters-releases-interim-silver-market-review/

A new gold supply and demand report is out from the World Gold Council for Q3 2015. Demand has been very high in Q3 2015 at 1120.9 tonnes. Supply has declined year over year to 1100 tonnes. This created a rise in the gold price in Q3. Demand will be subdued in Q4 because investors already bought their share in Q3. Supply decreased due to lower mining production and lower recycling of gold. The majority of increase in supply was due to net producer hedging, which basically means that miners sell their future production to bullion dealers in exchange for cash. Bullion dealers get their cash from central banks who sell their gold into the market. So the bullion dealer actually borrows gold from the central bank and will return it in the future, when the mine produces it. Of course, mines selling production now or selling production in the future has no net increase in supply eventually. A mine can only sell so much gold as its capacity allows. So basically, supply is drying up if we don...

Working Age has effects on the P/E ratio as described here , but also has an effect on the inflation rate. Yardeni describes this perfectly here . Younger people simply spend more than older people and contribute more to GDP and inflation. If we plot the percentage of younger people in society against the inflation rate we have a very nice correlation. This explains why Japan had a deflationary environment for so many years due to its low fertility rates. Knowing this, we now can expect inflation to go back up in China because they just announced an end to the one child policy this month in 2015. But this inflation will only come when these babies start to work. Bonus chart:

What a coincidence that we saw protests at the CME, which had a halt in its trading platform, at the same time that COMEX registered gold stock hit a new decade low. Registered gold is now so low, that we can actually just stop reporting on it. Are we finally seeing the final nail in the coffin? Did somebody not get delivery? I have no idea. Note that Bitcoin is at the same time starting to move up which means something is going on. New lows in registered gold (blue) at 151384.629 troy ounces. Record leverage at 45 eligible to registered gold. On another note, repatriation of gold from the U.S. is gaining pace and gold imports to Asia are accelerating. Premiums have gone down a bit, but are still robust. U.S. mint silver sales are still on track to hit records. U.S. mint gold sales were weaker.

Remember  my post on KYN ,  SIMO ,  TAICY ,  TYG ,  EWZ , XIN ? All have been doing well. XIN has given a handsome dividend of 6% while appreciating 15%, I'm amazed how well this stock screener idea works. I'm still keeping this stock in my portfolio as it is undervalued and can double in no time (because China decreased interest rates and decreased down payment on real estate), but let's go to another stock for our readers. Track record 6-0.Time to move on. If I don't have any ideas anymore what to buy, I use the  stock screener . What you want to do is filter on 4 attributes: market cap, P/E, dividend yield and percentage change. 1) Market Cap: do not choose small companies as they are mostly fraudulent or don't have sustainable earnings. Don't choose big companies because these are not volatile enough to get fast profits from. I'd filter between 200 million and 4 billion. 2) P/E ratio: choose the companies with the lowest P/E ratio, these companies ...

Please go to this link to hear the message of Jim Rickards about the insolvent Federal Reserve and the death of the U.S. dollar coming in 6 months from now.

Investment grade credit spreads are a leading indicator for buybacks. Buybacks are correlated with the stock market. A credit spread is the difference in yield between two bonds of similar maturity but different credit quality. For example, if the 10-year Treasury note is trading at a yield of 2% and a 10-year corporate bond is trading at a yield of 4%, the corporate bond is said to offer a 200-basis-point spread over the Treasury. As credit spreads rise, it gets more and more difficult to finance buybacks (credit conditions are worsening). Yields on corporate bonds go up (which coincides with a credit spread rise), which means that debt issued by the company (to buy back its own shares) has a higher interest rate. The result is that there will be less buybacks. There is a lag of 3 months (we borrow and then we spend). As buybacks are correlated with a rise in the stock market, we can assume that higher credit spreads are a leading indicator for lower equity markets with a lag of about...