Correlation Economics Backup

Look who is ceasing trading in gold, silver and platinum. SEHK is ceasing trading due to the fund being noted less than 150 million HKD. So your gold, silver and platinum you thought you owned has now been transferred into cash. That's why you need to buy physical precious metals in your possession, locked up in a safe place where nobody can find it.  

It is not a coincidence that the COMEX registered silver stock went down since 2015 (-1250 metric tonnes), while the Shanghai silver stocks are going up at the same time since 2015 (+1500 metric tonnes). And this stockpiling really accelerated in 2016 when the silver price started to take off. So basically China is buying up the COMEX physical stock. I wonder how long this will continue. The answer, not long: maximum 6 months. Then the silver price will blow up higher, because there is no way China will be selling that silver.

Status on how big each asset is these days.

Just a few items to evidence that gold is going a lot higher. 1: GLD added 20 tonnes in one day yesterday. The correlation suggests we should already be 20% higher at $1500/ounce. 2: First Majestic Bullion Store increased premiums to $19/ounce. 3: Junk silver is out of stock 4: Google trends sees an increase in: "Buy Gold" searches.

On June 24th, 2016, Britain voted to leave the EU. The immediate reaction was an 8% plunge in the Nikkei, financials dropped between 10-30%, negative bond yields went even more negative and gold surged 8%. George Soros predicted that we would have a 20% drop in pound and he was right. These are large moves and this is my take on what investors should be doing next. Read further here .

The stock to use ratio indicates the level of carryover stock for any given commodity as a percentage of the total use of the commodity. The stocks-to-use ratio is technically an indicator of supply relative to demand in quantity terms. So when the stock to use ratio goes down, prices go up. Let's illustrate this with some graphs. The CME regularly reports the latest stock to use ratios here . For example, corn STU ratios can be found here . Corn prices can be found in the chart below: When analyzing both charts, we see that when the STU ratio went down in 2010-2011, we saw a price spike in corn a few years later (2011-2012). Then the STU ratio went up in 2013-2014 and consequently we saw a drop in corn prices in 2014-2015. As the STU ratio is topping off again in 2016, I expect to see a rise in corn prices very soon. The rise in corn prices is also supported by the rough weather in Brazil. Let's look at wheat . The wheat STU ratio has ween going up since 2006, so it's cle...

Since the start of 2015, the price of platinum has dropped significantly. To show you how undervalued platinum is today, I like to compare it to the price of gold (see charts below). Historically, platinum should be priced higher than gold because it is rarer than gold. This all changed after 2015 when the gold price started to move above the price of platinum. Today, platinum costs $1000/ounce while gold costs $1260/ounce. So we are seeing an interesting arbitrage opportunity of an immediate 30% increase in the price of platinum. To see the analysis, go here .