Pay attention class – Lemmings have the reputation of acting in suicidal concert: Hmm…
Here are the Top 10 most crowded long and short trades according to UBS, and not surprisingly, it’s all tech among the top 5 longs, which include Google, Alibaba, Amazon (a jump from 8th spot as of the last ranking), Facebook and Visa (with AAPL sliding into 6th spot), while on the short side one name stands out: Tesla in the perennial top slot…
The slowdown in education costs may have other meanings to the economy…
Abundant supply is running up against demand constraints. The number of two-year and four-year colleges increased 33% between 1990 and 2012 to 4,726, Education Department data show. But college enrollment is down more than 4% from a peak in 2010, partly because a healthy job market means fewer people are going back to school to learn new skills.
Some of these trends may persist. The number of high-school graduates is projected to remain flat through 2023, according to an analysis by the Western Interstate Commission for Higher Education. White graduates, the most likely among races to attend college, are expected to decline over this period.
“The competition is bigger now than it has been, and I think we have more informed consumers,” said Sarah Kottich, chief financial officer at College of Saint Mary in Omaha, Neb.
Since 1975, March has been the worst month for gold, followed by April as the second-worst. The months of June and July tend to be a quieter period as investors shift their focus prior to strong later summer and fall months.
September has been the best month for gold over the past 41 years. Coincidentally (or not), September is also the worst month for the S&P 500.
Since 1975, the second quarter of the year has been by far gold’s worst—with returns dead flat over the 41-year period—and this year has been no exception, with gold down about 1%. On the flip side, the third quarter has been the best, outperforming its closest rival, Q4, by a whopping 40%.
Since the financial crisis, there has been only one predominant buyer of stock: the companies themselves, who have engaged in the greatest debt-funded buyback spree in history.
According to a chart from Credit Suisse, CS’ strategist Andrew Garthwaite writes, “one of the major features of the US equity market since the low in 2009 is that the US corporate sector has bought 18% of market cap, while institutions have sold 7% of market cap.”
A lot of precious metals investors are solely focusing on gold, but let’s not forget about silver. Silver is sometimes called ‘the poor man’s gold’, but things may be changing fast on this market going forward.
2016 was the first year in more than a decade wherein the primary silver production (coming from mines either as a main product or a by-product credit) decreased. After seeing a total silver production of approximately 668 million ounces in 2007 increase to 891 million ounces in 2015, we saw a (first) decrease since the early 2000’s to 886 million ounces in 2016.
As you can see on the previous image, the total recovery from scrap and the inflow from hedges decreased as well, causing the total silver supply to decrease by approximately 3% to 1.007 billion ounces, the lowest level since 2013.
Whilst the total demand for silver also decreased to 1.028 billion ounces, 2016 was the fourth consecutive year with a supply deficit. Sure, the deficit was just 21 million ounces, but that’s entirely due to the lower demand for jewelry and investment purposes. As you can clearly see in the same table, the demand from those two end-uses was 519 million ounces in 2015, but fell to just 414 million ounces in 2016, a decrease of 105 million ounces.
One of the arguments of bears is the decreasing use of the precious metal in the photographic sector. It’s absolutely impossible to deny that, but it’s also already clearly visible in the trend since 2007. In 2007 the silver demand for the photographic sector was 117 million ounces 12.32% of the total world demand, but last year, the sector needed just 45 million ounces of silver, which is now just over 4% of the total world demand.
This means that even if the demand for photographic uses would drop to zero (which isn’t impossible, although the sector demand has remained relatively stable since 2013), this would most definitely NOT cause a shift of the demand curve. One main contributor to the steady demand would be the increased use of the photovoltaic sector, where the silver demand reached its highest point éver.
So the supply side of silver isn’t really slowing down (yes, the total demand was lower due to lower demand for investment uses), but the silver demand from industrial sectors is still at an elevated level.
This also means the supply side will have to (try to) keep up with the demand. According to the Silver Institute, only 30% of the mine supply is coming from mines which have the commodity as a primary product. 12% comes from primary gold mines, whilst an additional 23% is mined as part of primary copper deposit. With the current low gold and copper price, not a lot of new mines will be developed which will put pressure on the supply side of the equation.
Fortunately 35% of the mine supply came from lead-zinc mines, and as these two commodities are performing well, it’s not unlikely more lead and zinc mines will be brought into production, boosting the silver output in the process. That being said, several larger zinc mines have been shut down and are still shutting down, and it looks like the average grade of the precious metal as a by-product in the ‘advanced stage’ zinc mines is dropping, perhaps even to a level where smelters don’t deem the silver to be payable due to low recovery rates in the process.
Long story short: the demand for silver is there ‘to stay’, but will the supply side be able to keep up with the demand? Scrap supply seems to have peaked, whilst it won’t be easy to increase the mine supply.
Source: By Secular Investor