Goldtent TA Paradise

Higher Silver

1. Karl says:

   July 31, 2016 - 7:41 pm at 7:41 pm

   The article, if I understand it correctly, states an interesting point (that I had not realized) that Ag-stocks are at heights that would seem appropriate for Ag prices substantially higher than the current Ag prices. PAAS’s stock price is where it was when Ag was 33-36/oz. Moreover, PM-stock prices frequently or typically lead PM prices. (I’m not sure this last point is firmly stated, but I don’t expect anyone would want to argue against it as a general tendency–though I’m about to argue against it as more than that.) Therefore recent movement in Ag-stocks points to upward movement in Ag prices.

   I personally am loaded to the gills with Ag, Au, and PGM stocks. I suspect the author is right. Maybe I should read the other stuff the author alludes to, but I won’t. This piece on its own, however, seems a bit on the glib side though.

   Does the Ag price necessarily have to go up just because the Ag-stock prices seem to price in a Ag price much higher than the current price? If the Ag price does have to go up since the Ag-stock prices are so very very high compared to the Ag price, does the Ag price have to go up **right now**? Couldn’t the Ag stock prices fall way back down to a level seemingly appropriate for the Ag prices–then go back up again along with the Ag prices? Couldn’t there be a really huge delay, even from now, before the Ag prices rise? Is it impossible that the Ag-stock prices won’t go right down to a level seemingly appropriate for the Ag price level and stay there indefinitely? What are the correlations between Ag-stock prices and prices of other stocks? Is it possible that such stock-to-stock correlations might be important determinants–or else correlations between Ag-stock and prices of other commodities (such as those used for mining)–or some sort of pricing of fear or great relatively specific for Ag stocks but not the metal? Is it possible that the value of the Ag businesses have a basis of valuation much different than Ag and that the market is actually properly pricing them in a different way–and that thus their charts can somewhat be looked on in isolation if one is good at looking at charts?

   If PAAS or whatever had a certain price when Ag was $33, were other conditions the same back then? Oil prices? Labor prices? Availability of heavy equipment? Interest rates? Trading activity? If PAAS’s price is where it was when Ag was 33 does that mean the Ag price should go up (or the stock price should go down)? Maybe, but maybe not. I’m not sure whether that it gives me much more info than a look at PAAS’s chart alone. I just don’t know. But I am grateful for you to indulge me in trying to sort my thoughts out in public.