Skip to content

Gold and Silver Speculation

– Posted Thursday, 10 April 2014 | | Disqus

By Keith Weiner


There is a stark difference between the states of the markets for the monetary metals. The number of open futures contracts in gold is low, while in silver its high. First, lets look at the data and then well discuss what it means.


Here is the graph showing the open interest.



The picture is clear enough. Since the beginning of fall, the number of gold contracts has blipped up and down and now there are somewhat fewer (-3.7%). Meanwhile, the number of silver contracts has gone up substantially (+39%).


Now lets look at the ratio of gold contracts to silver contracts, going back to 2010.



There is an unmistakable downward trend since the middle of 2010, almost 4 years ago. Then, there were about five gold contracts for every silver contract. Today, the ratio is down to two.


OK, but what does this mean?


Open interest is a proxy for speculative interest. This is not simply because contracts are created by buying, and destroyed by selling. You cant assume that contracts are created and destroyed as

Article source: