Our Global Precious MMI was up a point this month, climbing to 86 from 85 last month, an increase of 1.2%, but this may be the last increase we see for awhile as gold experienced its biggest single-day post-Brexit drop yesterday. It closed at $1,268.40 an ounce, a slide of 3%, down from $1,311.20 on Monday. It’s around $1,275 as of this writing.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

The yellow metal was dragged to its lowest point since the Brexit vote in June which was driven mainly by a bounce in the U.S. dollar after upbeat data triggered a break of key support at $1,300 an ounce. As speculation grows that the Federal Reserve may finally raise interest rates in December, the dollar has been given a boost and a selloff in gold has ensued. Losses in silver and platinum group metals have followed, although none fell as dramatically as gold this week.


We warned, earlier this month, that the first half investment appeal of precious metals was waning. The relatively tepid increase in September was a sign that the metals, as a group, simply could not keep the momentum of the first half. Most are blaming this pullback on the dollar, and that certainly has a lot to do with it, but the fact that economic fears about the U.S. economy have been quelled might be the real culprit.

U.S. manufacturing rebounded in September after contracting in August. New orders and production at factories increased, although employment fell. The Institute for Supply Management said Monday that its manufacturing index rose to 51.5 in September from 49.4 in August. Any score above 50 is a net expansion in manufacturing activity.

Two-Month Trial: Metal Buying Outlook

While gold is the most for-investment metal of the group, the others are experiencing similar effects as gold and their supply/demand fundamentals aren’t much better. Silver is more industrial, but acts as a safe haven, too, a veritable poor man’s gold. Platinum and palladium are more tied to the automotive and other catalyst markets. Still, they are moving largely in lock-step right now and have been doing so since the dollar bottomed out in May. Platinum is receiving a particularly cold shoulder from investors. The metal is well-supplied even if investment demand increases.

What Does This Mean for Precious Buyers?

A stronger dollar and better economic data about the U.S. economy is bad for the investment appeal of precious metals. More data will come out in the days leading up to the presidential election but precious metals’ gains of the first half are likely a thing of the past.

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

A couple of developments made precious metals soar in the first half of the year.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

A falling dollar was the first development that helped gold, silver and platinum group metals soar. Second, the U.K.’s Brexit referendum. Since their January’s lows, gold, silver, platinum, and palladium rose 30%, 50%, 44%, and 50% respectively.

Yes, supply/demand fundamentals differ from one metal to another. Gold has a big role in jewelry and investments. Silver has more of an industrial role, while automotive catalyst demand makes up about 40% and 75% of platinum and palladium demand. These distinct elements can cause these metals to behave differently from time to time but, overall, there are more two more critical drivers to pay attention to. The dollar and economic fears:

Gold (in yellow) vs Platinum (in Blue). Source: MetalMiner analysis of data

Gold (in yellow) vs platinum (in Blue). Source: MetalMiner analysis of data.

  • Back in December the U.S. dollar peaked. Weakness in the currency lasted until May and boosted the price of precious metals.
  • In May, the dollar bottomed out and started to climb, having a depressing effect on precious metals. But the effect didn’t last too long as toward the end of June, the U.K.’s Brexit referendum took place. The economic uncertainty pushed safe haven assets higher.
  • Finally, during the third quarter, the U.S. Dollar has been pretty neutral as investors wait for the Federal Reserve to take steps on raising rates at the same time as economic fears ease. The result? Investors lack reasons to push prices higher and consequently prices are retracting.

What This Mean For Metal Buyers

Unless the upcoming monetary policies cause the dollar to weaken, or new economic fears bring back the appeal for these safe haven assets, it might take a little while until we see precious metals rising like we saw in the first half.

Our Global Precious Metals MMI took a slight step backward this September, coming in at a value of 85 — a 4.5% drop from the previous month’s 89.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

However, the latter half of the summer has been kind to the gold, silver, platinum and palladium prices we track, with the past three months representing the highest MMI values of the entire calendar year.


All four precious categories tracked by the MetalMiner IndX softened over the month of August for our September 1 reading, contributing to the overall 4-point decline.

Main Index Drivers: Platinum and Palladium Prices

In a forthcoming MetalMiner analysis, my colleague Stuart Burns will share his findings from interviewing Trevor Raymond, director of research at the World Platinum Investment Council. The main takeaway? That the platinum market is like a “ticking time bomb.”

Two-Month Trial: Metal Buying Outlook

Essentially, the global platinum market has been in deficit for five years running, with mine strikes and shortfalls leading the way into a supply-side headache for the industry. Demand, meanwhile, appears robust, according to WPIC’s data and quarterly reports, led by developments on the heels of Volkswagen‘s diesel scandal, China and India’s jewelry desires, and a potentially interesting knock-on effect from rising oil prices.

However, the investment community will likely be the prime driver of PGM price movements in the future; but whether it’s a chicken-and-egg situation — rising prices spurring investment activity, or vice versa — remains to be seen.

Secondary Driver: Gold Prices

According to a recent release by Sprott Asset Management, “August marked the fourth successive month that gold prices rose in contrast to the dollar — something that has not occurred since metal peaked five years ago amidst the global financial crisis.

Demand is now at a four-year high with metal displaying one of its best yearly performances since the 1970s. Due to the rise of negative interest rates and a more volatile market, gold is looking like a safe bet for many investors,” right alongside platinum, it would seem; with a secondary positive aspect of the latter being its industrial element.

“As a result of sluggish global economic growth, central banks are pushing interest rates into negative territory, which is positive for gold,” according to Senior Portfolio Manager Paul Wong, along with the Sprott Asset Management precious metals team. “We are likely in the early stages of the current gold bull market, driven by a global push to a negative interest rate policy, currency volatility and a high level of cross-asset class correlation.”

My colleague and our in-house metals procurement specialist and analyst, Raul de Frutos, agrees — see his most recent report on the gold market.

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

Apart from lithium consumption and aluminum for light-weighting, it is unusual for the hybrid car market to cross paths with metals consumption stories but a recent article in the Economist details a technological development in the automotive industry that will be of interest to both.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

To anyone of even a mildly geeky nature, the Economist makes interesting reading drawing on history, new developments and the future path of electrical automotive technology. In brief, the issue is car voltage.

AdobeStock_ joel_420_electric_car_550_042016

Electric cars and hybrids are touted for their fuel capabilities, but the ability to optimize energy use in operation might be their real killer app. Source: AdobeStock_/joel 420.

Historically, cars started with six-volt systems but in the ’50’s — as vehicle’ electrical systems increased in complexity — the voltage was increased to 12-volt to cope with more onboard appliances, electric starters and so on. Well few things stand still in the automotive market and in spite of acute cost pressures, designers are starting to introduce 48-volt systems and are hoping, as adoption picks up, costs will come down.

What Are Those Extra Volts For?

First, what is driving it? Well, as the Economist explains, one reason is that cars are packed with more and more components, demanding more and more electrical power. A modern vehicle may have as many as 150 electric motors and new features like stop-start technology. These are putting strain on car systems, particularly those with high-compression diesel engines. Read more

This week, a comprehensive analysis of Dodd-Frank conflict minerals compliance filings showed that while some companies are going the extra mile to insure tantalum, tin, tungsten and gold are NOT influenced by the war in the Democratic Republic of the Congo, some still have a long way to go.

Two-Month Trial: Metal Buying Outlook

Sadly, no Party City filing this year attesting to how conflict-free mylar party balloons are.

MetalMiner Olympic Construction Beat

The rushed and low-bid Olympic venues of Rio struck again this week as we all had to make sure to nut adjust the contrast on our sets when the games treated us to green water in indoor pools. Apparently they just ran out of pool-cleaning chemicals, not a high-up line-item in the Olympic punchlist, I’d imagine.

Just pretend it’s St. Patrick’s Day in Chicago. Rio visitors and athletes also got a visit from some ROUS’ (rodents of unusual size). Yes, they very much exist.

Metal Bulls

Our Metal Markets kept gaining this week as the Federal Reserve is still showing no stomach for interest rate increases and China’s stimulus keeps on stimulating. The London Metal Exchange is even breaking 30 years of tradition and introducing gold and silver contracts to get in on all of the precious fun.


“Hey guys, let’s do this for silver and gold, too! Then, eventually, PGMs, too?” Source: London Metal Exchange.

Fresh off of slapping member-warehouse operator Metro International on the wrist, the LME is looking to expand its product mix and bring a greater return back to owner Hong Kong Exchanges and Clearing, Ltd.

Free Download: The August 2016 MMI Report

HKEX could use the help after this week.

After a gap of 30 years, the London Metal Exchange is, in collaboration with the World Gold Council, getting back into precious metals. Not just because it sees an opportunity, but because the industry is in desperate need of an efficient and professional marketplace following the departure of principal banks from London’s Gold Fix in the wake of the Libor scandal and suggestions the Gold Fix could be manipulated.

Free Download: The July 2016 MMI Report

The LME announced this week it will launch centrally cleared gold and silver contracts on a platform called LMEprecious in the first half of next year, followed by platinum and palladium.

Gold bars

Gold will trade on the basis of London good-delivery 99.5% bars in 100 ounce lots. Source: Adobe Stock/misunseo.

According to Bloomberg, the new contracts are designed to complement London’s $5 trillion over-the-counter gold and silver market and will include contracts for spot, daily and monthly futures, options and calendar spread contracts, according to the statement.

Who’s Got the LME’s Back?

Trading house OSTC and banks Goldman Sachs Group Inc., ICBC Standard Bank Plc, Morgan Stanley, Natixis SA and Societe Generale SA will co-own the LMEprecious platform and will act as liquidity providers and some 30 firms have expressed a desire to be engaged from the initial offering. Read more

MetalMiner’s index of global precious metals prices notched the second-largest move for August in our Monthly MMI series, behind only the Stainless MMI.


The Global Precious MMI rose 7.2%, from 83 to 89, between July and August. Gold prices again drove the move, with U.S. bullion logging its second straight month above the $1,300 per ounce threshold; however, the U.S. palladium price experienced a significant jump, rising 18.4% over the month.

Palladium on a Bullish Rebound

After hitting multiyear lows at the beginning of 2016, palladium has begun a slow down but its long-term ascent is still acting rather bullish.

Two-Month Trial: Metal Buying Outlook

The PGM has been making higher highs and lower lows since January, and hit above $700 per ounce at the beginning of August.

palladium historical price chart 2016


Looks like investors have been giving palladium and its cousin platinum some more love.

Analysts at INTL FC Stone and Citi Research have said recently that they think investors have taken some of the money they’ve been putting behind gold and spreading it to the PGMs, according to the WSJ.

Back to Gold

While U.S. gold prices have hovered recently, they are still far ahead of their pre-Brexit levels. The Federal Reserve‘s dovishness has not given investors any reason to abandon their investments in gold, or silver for that matter.

Core Consultants Group opined recently that gold broke through a psychologically important barrier of when it crossed $1,300/ounce and is still finding overall bidding interest despite the slight declines in the price during the last few weeks.

Free Download: The July 2016 MMI Report

We, too, can’t see gold’s recent increases being pushed back, or even tempered, by anything other than significant interest rate increases by the Fed. The type of radical action that the central bank has shown no stomach for, lately, despite recent comments that it won’t rule out increasing rates this year.

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

Gold and silver will return to the London Metal Exchange soon and China’s pollution crackdown may affect tin prices as many smelters have shut down.

Gold and Silver Return to the LME

The London Metal Exchange said today it is planning to launch spot and futures contracts for gold and silver in the first half of 2017, adding to its list of products which includes copper and aluminum.

Two-Month Trial: Metal Buying Outlook

The 139-year old exchange is working in collaboration with the World Gold Council, an industry body backed by gold mining companies such as Barrick Gold and Goldcorp, and is supported by five banks and proprietary trader OSTC, which have committed to provide liquidity.

China Cracks Down on Pollution

China could ramp up imports of refined tin as a string of environmental inspections at smelters in the world’s top producer of the metal curbs local output.

Free Download: The July 2016 MMI Report

Officials in eight provinces last month began inspecting metals producers including tin smelters, forcing some to shutter production while they look to comply with environmental standards, according to industry officials and analysts.

Every single price point across the precious metals tracked by the MetalMiner IndX — gold, silver, platinum and palladium — increased over the month of June, helped mainly along by the boon that Brexit has been (for precious producers, anyway…more on that below).

Two-Month Trial: Metal Buying Outlook

As a result, our monthly Global Precious MMI for July shot up 8% to 83, the index’s highest value since June 2015.

black and gold precious metals price index chart

Exit Britain, Enter Gold Price Increases

Britain’s vote to exit the E.U. left the pound Sterling in turmoil, with the British currency recently troughing at a new 30-year low, with no end to the bleeding in sight, while the Euro has also suffered. We all know what that means: investors flocking to safe-haven assets, such as gold. Which, in turn, means producers will be able to justify keeping near-to-medium-term mine production levels and exploration status quo (at least).

The U.S. bullion price of the yellow metal jumped 8.7% month over month, a significant increase. (Correspondingly, US silver bars shot up 17.2%.) Just after the Brexit vote results came in, HSBC analysts predicted that gold will breach $1,400 per ounce. It has already been flirting with the high $1,300s the past couple weeks and, according to HSBC Chief Precious Metals Analyst James Steel, “the drive higher may be more than 10% in the longer term if there were to be broader concerns about the future direction of the E.U. after the vote,” as originally reported by Kitco News.

Investors Go Long

Adding more fuel to that fire, hedge funders increased their net long positions in COMEX gold and silver contracts to record highs by the end of last week, further showing their bullishness in the safe-haven asset, according to Reuters.

Another major driver of the gold price has been the U.S. bond market. As my colleague Raul de Frutos has written, treasury prices soared and yields plunged to four-year lows as investors continued to seek haven assets. The benchmark 10-year Treasury yield fell as low as 1.45% two weeks ago, the lowest level in four years. Bond yields not only fell in the U.S.; British 10-year government bond yields sank below 1% on Monday for the first time ever. Similarly, Japanese bond yields fell below 0.1% for the first time, reflecting unprecedented long-term pessimism.

The lower the yield, the lower the returns investors get from their bonds. That’s important, because in periods where yields are near zero, many investors prefer to buy gold rather than bonds. In this manner, in the current stock market turmoil, part of the money that would normally go to assets paying a yield is going to gold instead.

Negative interest rates worldwide also help gold’s case.

Big M&A News: Centerra Gold + Thompson Creek Metals

All this Brexiting has prepped large Canadian miner Centerra Gold to pull the trigger on acquiring Thompson Creek Metals last Tuesday, based in Denver, as reported by Reuters.

The price tag: $1.1 billion, including debt.

Compare Prices With The June 2016 MMI Report

The main reason: Centerra owns and operates its main asset, the Kumtor gold mine, in Kyrgyzstan, and seeing as how the Asian nation wants a bigger cut of Centerra’s pie lately, the Canadian miner wants to reduce its exposure in Asia while boosting its footprint in North America.

With the recent upsurge in gold prices, times for miners such as Centerra are looking quite rosy.

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

The Global Precious MMI joined most of the other sub-indexes this month in experiencing a 6% loss as a broad metals correction hit most markets.

Two-Month Trial: Metal Buying Outlook

Unlike the base metals, however, our precious metals are not facing bifurcated markets where U.S. tariffs are keeping domestic prices high. As almost always with precious, this month’s fall was a global phenomenon.


Johnson Matthey is weathering the storm as best as it can this year as platinum group metals prices are starting to lose the momentum the first half of the year promised.

Production Surplus Stubbornly Lingers

According to Thomson Reuters‘ “GFMS Platinum Group Metals Survey,” a rebound in mine production last year pushed the platinum market back into a marginal physical surplus, despite improved demand.

Macroeconomics have continued gold’s roller coaster ride this month. Before Federal Reserve Chairwoman Janet Yellen dialed back expectations of an interest rate hike this week — after a bad jobs report — a strengthening U.S. dollar dragged gold prices down for much of May. Now, though, with a dovish Fed, gold is strengthening again. Silver has taken a similar ride.

Perfect Storm

The investment and industrial metals, globally, saw prices fall this month as a storm of both bad economic data for the investment metals and oversupply for the industrial metals came together. Yet, even as I write this gold and silver are strengthening again as the dollar weakens in light of that horrid jobs report. But it might just be that neither industrial demand nor monetary policy will be the story of the last six months of 2016 in precious metals.

Compare Prices With The May 2016 MMI Report

Jessica Fung, a metals strategist at BMO Capital Markets, said in the Wall Street Journal that slowing global growth should help push gold higher and likely bring silver with it.

“We believe focusing on the Fed alone is simplistic and only drives very near-term sentiment and volatility,” Ms. Fung wrote in a note. “The potential impact of sluggish global growth on the U.S. economy should not be ignored.”

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