John Butler — Is the Metals Correction Over? "RAM" Suggests So
A guest excerpt Prins shares from John Butler (Amphora Report): his proprietary "risk-adjusted margin" (RAM) metric — which flagged dangerously high speculative interest in silver back in January — now suggests the metals correction is probably over, a setup for a July rally.
One-line take: a guest contribution — Prins shares an excerpt of research by international investment consultant John Butler of the Amphora Report. Back in January Butler flagged "dangerously high speculative interest in metals, in particular silver," using his proprietary risk-adjusted margin (RAM) metric; a large correction duly began and has continued into recent weeks. His read now is that the metals correction is probably over — a setup for a July rally. RAM gauges how much of a commodity's price move is speculative vs commercial by taking the exchange margin (the collateral to open a futures position — the "cost" of speculating) and adjusting it for the commodity's option-implied volatility. On that risk-adjusted basis he currently reads soybeans as cheap to speculate in, crude oil expensive, gold cheaper than silver (though silver runs 2–3× gold's volatility), and copper and wheat as quite costly. No individual securities are named — only commodity classes (gold, silver, copper, wheat, soybeans, crude oil) — so there is no stock table; the takeaways are below.
1. Stocks & names mentioned
A macro / commodity-speculation excerpt — no individual securities are named in the public text. Only commodity classes (gold, silver, copper, wheat, soybeans, crude oil) are discussed, through Butler's RAM lens. No stock table for this post; the takeaways are below.
2. Key points
The setup — January's speculation warning played out
- "Back in January I presented evidence of dangerously high speculative interest in metals, in particular silver. Sure enough, a large correction began shortly thereafter and has continued, if in less spectacular fashion, in recent weeks." Butler's strongest evidence was his proprietary risk-adjusted margin (RAM) measure.
- The framing of the piece — and Prins's headline — is that RAM now suggests the metals correction (especially in silver) is probably over: a setup for a July rally.
What RAM measures — the "cost" of speculating
- There is a way to estimate how much a commodity's price rise is driven by speculation vs commercial supply/demand: look at the "cost" of speculating, measured by the margin (collateral) a speculator must post on the exchange to open a futures position. The less it costs to speculate, the more room for speculation.
The refinement — adjust margin for volatility
- RAM goes a step further than raw exchange margin: it adjusts the margin for the commodity's implied volatility, as observed in the options market. Raw margin alone misleads — soybeans look very cheap to speculate in and crude oil expensive, but crude is normally far more volatile than soybeans.
- In metals, gold currently looks much "cheaper" to speculate in than silver on raw margin — but that too misleads, because silver tends to be 2–3× more volatile than gold.
The current risk-adjusted read across commodities
- By taking volatilities into account, RAM gives a better guide to which commodities are attracting speculative interest. Adjusting for risk, the "cost" of speculating in copper or wheat is currently quite high (rather than moderate) — i.e. less speculative froth there than raw margin implies.
Aside: this is a guest excerpt
- Prins shares only an excerpt of Butler's Amphora Report piece; the full article (and its charts) live at the Amphora Report. No portfolio positions or tickers are attached to the RAM discussion here.
Key points extracted from the public Prinsights Substack excerpt (text in transcript.txt) for personal study. A guest macro/commodity-speculation excerpt from John Butler (Amphora Report), shared by Nomi Prins — no individual securities named. Not investment advice. © Nomi Prins / Prinsights & John Butler / Amphora Report for source material.