By Keith Weiner
Since our last silver article, the price of silver has dropped. With due respect to Frederic Bastiat, the price is the seen. The basis mostly goes unseen. We will take a look at the market data, revised for a few more days of trading.
Warren Buffett, 2008, and the Cobasis
But first, let’s look at a chart we have discussed a few times over the years. It shows two ratios: gold basis to silver basis, and gold cobasis to silver cobasis. It shows a measure of gold’s abundance to silver’s abundance, and gold’s scarcity to silver’s scarcity. When the blue line is above 1, it means the gold basis is higher, which means gold is more abundant. When the red line is below, it means gold is less scarce.
Gold and Silver Basis Ratio
The blue line is not merely above 1. It is now above the spike in Oct, 2008. To find a level this high, we have to look as far back as 2006. In other words, 16 years. Before that, 2001. And before that, 1998, when Warren Buffett’s Berkshire Hathaway was buying mass quantities of silver—after he drove the price up 73% from about $4.25.
#1: ghostdogtxn To: Horse (#0)
ghostdogtxn posted on 2022-09-03 07:50:43 Reply Private Reply
#2: Horse To: ghostdogtxn (#1)
Horse posted on 2022-09-03 09:22:28 Reply Private Reply
#3: Lod To: Horse (#0)
Lod posted on 2022-09-03 10:03:17 Reply Private Reply
#4: Pinguinite To: Lod (#3)
Distressed economies tend to make currencies in the economies more valuable, unless the currency itself is in distress. Russia cutting off all gas to Europe shocked the markets yesterday. Crypto got hit too.
Pinguinite posted on 2022-09-03 14:00:50 Reply Private Reply
#5: StraitGate To: Lod (#3)
But tomorrow never comes.
StraitGate posted on 2022-09-03 16:40:20 Reply Private Reply
#6: StraitGate To: Lod (#3)
Since that time, the S&P 500 has outperformed silver by a factor of 2.43.
Were I to sell now, I'd lose as much on silver in the last 16 years as I've lost to Bidenflation in the last 2 years.
StraitGate posted on 2022-09-03 17:01:33 Reply Private Reply