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.
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.
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).
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:
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?
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.
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.
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.
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.
Exact Precious Metals Prices and Trends
The price of US palladium bar fell 9.5% to $609.00 per ounce. At $34.26 per gram, Chinese platinum bar was down 9.0% for the month. The price of US platinum bar closed the month at $982.00 per ounce after dropping 8.8%.
Indian silver prices fell 8.4% to $541.82 per kilogram. Japanese platinum bar prices dropped by 8.1% this month to $31.59 per gram. A 7.1% decline for Japanese palladium bar left the price at JPY 2,470 ($19.91) per gram.
A 6.6% drop over the past month left US gold bullion at $1,095 per ounce. After falling 6.4%, Chinese gold bullion finished the month at $35.31 per gram. Following a 6.0% decline in price, Chinese palladium bar finished the month at $22.84 per gram.
Chinese silver prices dropped by 5.9% this month to $515.48 per kilogram. After falling 5.9%, Indian gold bullion finished the month at $393.44 per 10 grams. A 5.7% decline for Japanese gold bullion left the price at JPY 4,365 ($35.19) per gram. At $14.79 per ounce, US silver was down 5.6% for the month.
Following a 3.9% decline in price, Japanese silver finished the month at $4.76 per 10 grams.
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.