Precious Metals

hand holding binoculars metalminer promo

Get your short- and medium-term buying strategy for industrial metals.

Less than one week away! Join us Thursday, August 27 at 10 a.m. CDT for the webinar, PREVIEW: MetalMiner Price Forecasts for September.

Can’t make it live? Register anyway and we’ll send you a copy of the slides and recording of the webinar for you to view at your convenience.

For the second consecutive month, we will be providing a behind-the-scenes look at our metal price forecasts and how we formulate our new Monthly Metal Buying Outlook reports. If you source aluminum, copper, nickel, lead, zinc, tin or steel and are in need of expert insight, market commentary and a medium- and short-term trend analysis for these base metals then this is the webinar for you!

Speakers to include:

lisa reisman metalminer headshotLisa Reisman, CEO, Azul Partners and executive editor, MetalMiner
Lisa has more than two decades’ experience in management consulting and direct materials sourcing. She previously owned and operated her own aluminum trading company, as well as served in past roles at Andersen and Deloitte Consulting.

 

john conolly metalminer headshotJohn Conolly, managing director, Azul Partners
John also has more than two decades’ experience, but in listed derivatives, trading commodities and client advisement on hedging commercial risks. He comes to us from the CME Group where he was director of product marketing, and has been featured on CNBC, Bloomberg and Fox Business News.

Register today!

 

{ 0 comments }

RBC Capital Markets recently released updated forecasts for the gold and silver markets. Conventional wisdom says that safety plays such as precious metals outperform during periods of stock market weakness, but, as we’ve pointed out before, general commodity weakness is dragging down even traditional hedges such as precious metals along with their base metal cousins.

Free Sample Report: Our Monthly Metal Price Outlook

With the market volatility of the last few days, one might think that silver and gold would see a rebound as investors, at least initially, abandon stocks and put their money into something reliable such as hard currency. Gold and silver are up, but the outlook for the precious cousins is still, at best, mixed.

Could gold's hedging value by renewed by falling stock values?

Could gold’s hedging value by renewed by falling stock values?

In the report, analyst Stephen Walker lowered his price targets for both gold and silver through 2018. RBC reduced its Q4 2015 forecast for gold from $1,300 an ounce to $1,150/ounce, a 12% reduction. For silver, RBC scaled back its Q4 2015 forecast by 15%, from $18/ounce to $15.25/ounce.

RBC believes that a Federal Reserve interest rate hike in a weak inflationary environment will pressure gold and silver prices. That hike got a little less likely, at least in the near term, in the last few days as the global stock market plunge happened. Cheaper imports from China mean lower prices and deflationary pressure in the US.

All of the precious metals we track on the MetalMiner Indx were up after Friday’s market selloff and gold held firm in a tight range on Monday in London, trading above $1,155 per ounce as China’s markets continued to plummet.

According to data gathered by Commodity Futures Trading Commission, last Tuesday the COMEX gold futures and options net position of managed money turned bullish for the first time in five weeks. Silver’s net position of managed money also was bullish last week after seven bearish weeks. Treasury bonds, another safe haven, saw their yields fall, as well. The 10-year Treasury yield fell below 2% for the first time in nearly four months and traded 7.8 basis points down on the day at 1.976%, its lowest point since April 28.

Free Download: Latest Metal Price Trends in the August MMI Report

It is too early to tell if gold and silver will see their hedge appeal restored, but the conversation has significantly changed when it comes to interest rate hikes and weary investors may see silver and gold in a different light, depending on how long China’s market rout continues.

 

{ 0 comments }

A major bank cut its last time with commodity trading and global stocks are still falling due to the situation in China.

Deutsche Bank Leaves the Commodity Business

Deutsche Bank will sever its last link with commodity trading by resigning as a clearing member of the London gold and silver over-the-counter business, two industry sources close to the matter told Reuters on Thursday.

Free Sample Report: Our New Monthly Outlook

The move leaves five banks: Barclays, HSBC, Bank of Nova Scotia, JP Morgan and UBS to settle daily bullion transactions between dealers, amounting to more than $5 trillion worth of metal each year.

Stocks Still Falling

Signs of a sharp slowdown in the world’s second-largest economy, China, have unnerved investors since Beijing surprised markets last week by devaluing its currency. Shares in the US, Asia and Europe have tumbled along with commodity prices as investors worry about waning Chinese demand.

Free Download: Latest Metal Price Trends in the August MMI Report

 

{ 0 comments }

The US Court of Appeals for the District of Columbia Circuit in April 2014 upheld the bulk of the Security and Exchange Commission’s then-new Conflict Minerals Rule, but ruled a key disclosure requirement violated the First Amendment because it forced a company to “confess blood on its hands.”

Free Sample Report: Our Monthly Metal Price Outlook

The same federal appeals court ruled against the disclosure requirement a second time Tuesday, saying an investigation requirement is fine, but disclosing that material remains untracked does not require an admission tantamount to guilt, when it comes to receiving raw materials from war-torn areas.

Disclosure of Unknown Origin

The Dodd-Frank Wall Street Reform and Consumer Protection Act required companies to disclose whether any tin, tantalum, tungsten or gold (commonly known as 3TG), in their supply chains is connected to violent militia groups in Africa.

An SEC spokesman said the commission is reviewing Tuesday’s decision.

The three-judge appeals panel split 2-1, effectively siding with business groups in ruling that forcing companies to designate which products “could not be found to be ‘DRC conflict free’” is tantamount to requiring firms to criticize their own products.

Two judges appointed by Republican presidents voted in the majority and a recent appointee of President Barack Obama dissented.

Conflict Minerals Rule Still Intact

The court’s rulings did not overturn the entire Conflict Minerals Rule, it actually upheld requirements such as having companies investigate whether their products include the minerals and a requirement to file public reports on their investigations, a process that began last year.

One situation where a respondent could not confirm that all of its raw materials were DRC conflict free, was party supply retailer Party City, a company that filled out a conflict minerals compliance form and asked their suppliers where, exactly, all of the materials for their mylar balloons and other party supplies came from. Party City reported it received little response from its supply chain.

That was one of many cases that highlighted the difficulty of actually vetting and confirming supply chain compliance for the wide range of businesses that the Conflict Minerals Rule covers.

What Does This Mean For Conflict Minerals Compliance?

In a statement after the initial ruling against the SEC last April, the regulator indicated that companies are not required to identify products as “DRC conflict free,” having “not been found to be ‘DRC conflict free’” or “DRC conflict undeterminable.” The SEC also indicated that, pending further action, an independent private sector audit (“IPSA”) will not be required unless a company voluntarily elects to describe its own product as “DRC conflict free” in its Conflict Minerals Report. That statement is likely to remain in effect pending the outcome of further litigation. It also looks unlikely that the private sector audits will be required this year and, barring a legal settlement, likely most of next year.

Free Download: Latest Metal Price Trends in the August MMI Report

The SEC can petition the entire DC Circuit Appeals Court to hear the case en banc, a request that the court can decide whether or not to grant. The SEC can also appeal to the US Supreme Court no matter what the outcome is at the circuit court level. The business groups that challenged the Conflict Minerals Rule can ask the court to stay the entire law, as they did after the April decision, but it’s not likely that the court would grant such a request as a stay was not allowed after the initial decision.

Most larger companies — in a variety of industries — intend to continue implementing their 3TG traceability and responsible sourcing initiatives no matter what the outcome of the case concerning the DRC measure.

{ 0 comments }

A major gold bull reduced its investment in the largest gold ETF just in time, and a specialty steel maker locked workers out over healthcare contributions this week.

Paulson Partially Dodges Gold Bullet

Hedge fund Paulson & Co. cut its stake in the world’s biggest gold-backed exchange-traded fund in the second quarter of 2015, after holding it unchanged for six straight quarters, just before prices took a tumble, a filing showed on Friday.

Free Sample Report: Our Monthly Metal Price Outlook

The move came just before spot gold prices tumbled 6.6% in July, their weakest monthly performance in more than two years after a steep selloff in Shanghai and New York, and on expectations for the Federal Reserve to raise rates as early as September.

Paulson & Co., led by longtime gold bull John Paulson, cut its stake in SPDR Gold Trust by 1 million shares to 9.2 million shares worth $1.04 billion in the quarter ending June 30, according to the 13F-HR filing.

The sharp reduction came as SPDR holdings fell by 3.5% in the quarter

ATI Locks Out Workers Over Healthcare Premium Contributions

400 Workers protested outside of Allegheny Technologies, Inc.‘s plant in Beaver County, Pa. The workers were picketing a lock out of 2,200 United Steelworkers of America-represented employees at plants in six states today.

The disagreement between ATI and the union centers on employee health benefits. ATI had proposed monthly premium contributions starting at $125 a month and increasing to $215 by the end of a proposed four-year contract. That would be coupled with higher deductibles and out-of-pocket maximums.

Free Download: Latest Metal Price Trends in the August MMI Report

Negotiations hit a wall last week when the Pittsburgh-based specialty steel manufacturer proposed a “last, best and final offer” to the union and threatened the lockout if workers did not accept the proposal by Monday.

The union balked at concessions sought by ATI.

 

{ 0 comments }

As the base metal and ferrous metal complexes we cover continue to take a bruising, the peripheral hits have struck our precious metals price index as well, with PGMs platinum and palladium leading the charge downward.

Free Sample Report: Our New Monthly Metal Price Outlook

In fact, the monthly Global Precious Metals MMI® registered a value of 74 in August, a decrease of 7.5% from 80 in July – thereby hitting a new all-time low. Every single metal price point for gold, silver, platinum and palladium dropped across all geographies we track, including the US, China, India and Japan.

precious metals price chart august 2015

This index has never seen the 70s before, and it's not having a really nice day as they used to say in the '70s (at least not for investors).

RELATED: 3 Best Practices for Buying Commodities

Precious Metal in Focus: Palladium

According to my colleague Raul de Frutos, writing at the end of July, palladium prices fell as much as 14% during that month:

[caption id="attachment_72084" align="aligncenter" width="500"]Palladium price since 2013 Palladium price since 2013. Graph: MetalMiner.[/caption]

Ironically, palladium was the best performer among precious metals until just about a year ago when it started to fall, Raul wrote. So far, year-to-date, palladium has tanked 32% with the most precipitous drop showing over the past two months. So what's been driving the price meltdown?

Free Download: Compare with Last Month's Trends Analysis

Due to its role in gas-powered car engines, palladium is more exposed to the Chinese and US automotive markets than to European markets. The slowdown of the Chinese automotive market over the past few months may be Public Enemy No. 1 as far as a driver of palladium's price decline.

Free Download: Compare With the July MMI Report

Just a couple days ago, BMW and Toyota Motor Corp. publicly voiced their concerns over China's car market, saying that the days of double-digit growth are likely over, as reported by Bloomberg. Both companies are concerned about their profits getting dinged, and are therefore cutting back production based on low demand numbers – BMW, for example, said earlier this week that it had cut production in China by 16,000 cars so far this year.

And Platinum?

South African mines, producers of 70% of the world's supply, have been reporting production levels for platinum above those during the 5-month strike in 2014, as Raul has pointed out in his previous coverage. Combined with the lollygagging of the Chinese auto sector, looks as though platinum prices may not see a huge rebound for some time as well.

Wild Card

Remember, the strength of the US dollar plays a big role in the movement of this index. The dollar-to-euro exchange rate has been listed as the No. 1 driver of all the base metals in our latest, newly revamped monthly buying outlook, and it's safe to say that's no exception for gold and silver movement – when the dollar is strong, investors tend to leave gold behind as a safe haven a little more often.

The Global Precious Metals MMI® collects and weights 14 global precious metal price points to provide a unique view into precious metal price trends over a 30-day period. For more information on the Global Precious Metals MMI®, how it's calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

For full access to this MetalMiner membership content:
Log In |

US companies shelled out roughly $709 million and six million staff hours last year to comply with regulations to disclose conflict minerals in their supply chains, according to recent research by Tulane University and Assent, a software and services firm that partners with companies to automate their compliance processes.

party city mylar balloons

Adorable possible violations of the Dodd-Frank conflict minerals compliance regulations.

A glance at the results of the study, which included 2015 Dodd-Frank 1502 form SD submissions, showed how each company performed according to Securities and Exchange Commission regulations and OECD due diligence guidelines. A team led by Tulane University’s Chris Bayer, PhD., ranked all 303 respondents according to both criteria. Assent has provided an excellent video explanation of the criteria for anyone interested.

Free Download: Sign Up for Our Monthly Metal Price Outlook

We have also written extensively about how US manufacturing firms can comply with the Dodd-Frank conflict minerals regulations and this study is the first major one to quantify the difficulty firms, large and small, face in confirming that their supply chains are conflict minerals free.

The research focused on company disclosure processes regarding the use of minerals such as tin, tantalum, tungsten and gold from the Democratic Republic of Congo, a mineral rich nation that is mired in ongoing civil war. More than 80% of the companies that filed compliance reports with the SEC said they couldn’t identify whether their products contain conflict-free minerals.

Selling Mylar Balloons And Selling Computers: Are They The Same?

A curious case comes from the party materials and decorations retailer Party City Holdings, Inc. We were surprised to see that Party City filled out a 1502 form at all, as most of the companies on the list were large manufacturers and technology companies such as Apple, Microsoft and IBM and not party supply retailers known more for selling funny St. Patrick’s Day hats and last minute Halloween costumes.

But, dutiful corporate citizen that it is, Party City noted on its EX 1.02 form (an addendum to 1502 form SD) that, “It is possible that certain of the company’s metallic balloon and novelty products may contain Conflict Minerals. The Company’s policies prohibit the use of conflict minerals from covered countries, as documented in our vendor standards manual. The company has numerous suppliers and some of the suppliers may in turn have sub-suppliers. The company relies on its suppliers to provide information on the origin of any conflict minerals contained in the products supplied to the company (the “Covered Products”). Contracts with direct suppliers may be in force for multiple years and historically did not require the supplier to provide the Company with information regarding the origin of any conflict minerals. Accordingly, we rely on the cooperation of our direct suppliers to provide the necessary information on the origin of any conflict minerals.”

Party City got a ranking in the bottom 30 of the respondents for being honest about its balloons and other party materials. While it’s sort of funny to discuss mylar balloons in this context, the question of how to vet the suppliers of suppliers is NOT unique to the company.

Three Best Practices for Buying Commodities

Party City surveyed its suppliers with respect to the origin of any conflict minerals that are included in its products. Of the suppliers who responded, none responded that they use conflict minerals from the covered countries. For those suppliers who did not respond to the initial inquiry, the company sent a follow-up inquiry to solicit their response. What more can a seller of mylar balloons and giant inflatable palm trees do?

80% Can’t Account for Entire Supply Chains

Is it any wonder that 80% of the companies couldn’t identify whether their products contain conflict-free minerals? Another 9% used language that didn’t specify if their supply chains even contained the metals in question, according to the report.

“The public needs to understand that this isn’t as simplistic as they might think,” Lawrence Heim, director of advisory firm Elm Sustainability Partners in New Haven, Ct., and a member of the study advisory panel, told Bloomberg News. “There are more technical obstacles in terms of being able to obtain information and data from suppliers.”

The companies in the top 30 for compliance include industry heavyweights such as Nokia, Blackberry Limited, Ford Motor Co., Goodyear Tire and Rubber Co. and the aforementioned Microsoft, IBM and Apple.

Microsoft, for example, provided a framework for detailed due diligence to support responsible global supply chain management of minerals with its 1502 SD form. There’s an entire section on supplier engagement. The Redmond, Wash., software giant also provided a detailed explanation of supplier guidelines on their site.

While it is certain that a level of diligence above simply asking suppliers where they get their materials from exists, it still begs the question of can the Dodd-Frank conflict minerals regulations be effective when they treat Party City and Microsoft as if they are, essentially, in the same business and dealing with the similar supply chain issues.

{ 0 comments }

Construction spending still isn’t taking off in the US and most companies can’t guarantee their minerals are conflict-free.

{ 0 comments }

We have often noted the funny ways metals are marketed in the overall media here at MetalMiner. Whether it’s steel being touted for its strength, while alloyed with titanium, or zinc being used to galvanize rods in environments where galvanizing won’t help, the the images of strength, resiliency and luxury certain metals hold benefit the sector as a whole.

{ 0 comments }

Energy prices got hit the most with oil prices falling below $50/barrel, followed by precious metals. Gold prices hit a 5-year low, falling as much as 8% in July, silver of course, followed because metal price correlation is still an important factor to account for.

{ 0 comments }