Steve,
You seem inclined to intone on things of which you know virtually nothing. Allow me to explain a few basics for you, so you need not theorize nonsensically in the future.
CPM Group does not include investment demand in its supply-demand balances because that is how commodities research is done, properly. Commodities economics 101 is that a market balance is Total Supply Les Fabrication (or Consumption) Demand. All legitimate market analyses progress from that start. One always excludes investment demand from the calculation, for several reasons. One is that in investment demand the product remains in fungible form, able to re-enter the market at any time. A second reason is that the drivers of investment demand for most commodities are different from those of fundamental, consumption, fabrication demand. The most important reason probably is that one wants to invest in commodities that are fundamentally in tight supply: Commodities in which Fabrication Demand exceeds or is close to Total Supply. If you pollute your fundamental analysis by including investment demand with fabrication demand you cloud that issue.
That is basic commodity analysis. The only place where you find investment demand included with fabrication demand is in precious metals, where marketing groups seek to portray the markets as being in more bullish positions than they are. That is the procedure CPM follows, along with all other legitimate commodities research operations.
The only two sets of people who include investment demand with fabrication demand are: 1. Marketing types that want to show a more bullish fundamental story than really exists. Include in that the WGC, SI, and their associates. 2. People who do not know better.
Let me give you two examples
1. In the gold market there used to be research provided by CPM Group and Consolidated Gold Fields' research department. Both groups treated investment demand as an off-balance item. CPM actually divides the gold market into three segments: Total Supply, Fabrication Demand, and Stock Demand, the last category including net private sector investment demand and net official transactions. After the creation of the WGC circa 1987, the breakup of CGF, and the creation of GFMS, the major client of which was the WGC, the WGC's data began adding investment demand in with fabrication demand, knowingly seeking to portray gold in a more bullish light.
2. CPM created the World Silver Survey for the Silver Institute, in 1990. Our initial contract specified that we had total editorial control over the contents. Some members of the SI immediately and continually tried to force us to include investment demand in with fabrication demand, to portray a more bullish silver market balance. We refused and after the first five-year contractual period went our separate ways. SI approached GFMS, which did not do silver research up to the mid-1990s. It offered to give GFMS the contract, but demanded editorial 'oversight' and wanted more bullish and more compliant underlings than CPM would be. GFMS, which already had added investment demand to its gold statistics for the WGC, was readily willing to bastardize basic commodities market research principals for SI too.
That's the simple, plain, verifiable truth. Legitimate commodities research does not include investment demand in the fundamental (some call it primary) balance.
So, if you include investment demand in your balance, you have to admit, at least to yourself, which of the two categories you fall into: 1. Are you are marketeer who will purposefully distort basic economic analysis to hype the market and dupe investors into believing things, or 2. Are you simply uninformed about how to undertake fundamental market analyses of commodities.
You are, by definition, one or the other.
Since I am taking the time to provide you valuable fundamental economic insights, allow me to point out another thing to you.
The United States has been a net importer of silver for all but 18 of the 85 years since 1931. The 18 years fall into four periods: The run-up to the Great Depression, World War Two, the 1960s demonetization of circulating silver coins and Silver Certificates, and a period in the mid-1990s when there was a surge in silver demand from another country. The amount of net exports of silver hve been huge for most of this time, ranging from 70 to 149 MM oz per year since 2000. I tried to put a chart here, but your website would not allow me to cut and paste it. The 148, likely to be matched when full year 10`5 data are available, was in 2011, the year of the Great Panic. From 1998 through 2015 net imports totaled 1.9 billion ounces. From 1970 through 2015 net imports totaled 3.4 billion ounces. From 1931 to 2015 the total was 5.0 billion ounces. The volumes of net imports into the United States in the past two years is nothing new. The peak year was 468 MM oz in 1935.
I mentioned this enormous historical pattern of net U.S. silver imports to one of your acolytes. His True Believer reaction was fabulous. 'It's not sustainable' he said. Except that it has been for the past 85 years. I suppose in the really, really long term maybe it's not sustainable.
I hope these two pieces of fundamental research help your future silver analyses.
Jeff Christian
Commenté il y a 3100 jours |