Global Precious MMI: PGMs Drive Strong July

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Here’s What Happened

  • MetalMiner’s Global Precious MMI rose 2.4% to a value of 85, breaking into a new high for 2017.
  • Our sub-index tracking gold, silver, platinum and palladium prices from around the globe last hit this level in October 2016, when it reached a value of 86.
  • That makes two straight Augusts (2016 and 2017) of strong performance for precious metals. After a lackadaisical second half of 2015 and first half of 2016, the Global Precious MMI hit a scorching 89 in August 2016 — the index’s highest peak since February 2015.

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What’s Going On in the Background?

  • Since we tend to keep a closer eye on the platinum group metals (PGMs) due to their automotive applications, the U.S. platinum price tracked by the MetalMiner IndX ticked back up 2.3%, while the U.S. palladium price continued steamrolling, rising 3.4% on the month.
  • These PGM prices increases, in addition to marginal upticks for gold and silver in the U.S., are the main drivers of the index’s gain.
  • As we reported in June, platinum companies continue to battle for profitability — one such firm being South Africa’s Lonmin. After the company reopened shafts and expanded its biggest operation a couple months ago, it’s now planning to sell excess processing capacity “of up to 500,000 platinum ounces per year, to maximize cash from processing operations and preserve cash,” according to Reuters. The tough economic environment in South Africa, as well as inflationary pressures on platinum mining in general, are to blame.

What Metal Buyers Should Look Out For

  • Certainly keep an eye on the global automotive sector, which has been motoring along lately in China especially, as the longer-term driver (HA!) here.
  • Certain rosy outlooks from firms such as Research and Markets indicate a bullishness that refuses to let up on the gas (it’s August, y’all, we’re getting those all out of our system before the fall revs up — see?!). According to my colleague Fouad Egbaria’s coverage, “advances in automobile technology and pharmaceutical applications will see a rise in demand for this subset of metals, according to the research report.”
  • The dog days of summer have shown life with a last gasp, perhaps setting the stage for a continued rise into autumn, especially if political turmoil gets any worse and any looming stock market corrections set the tone.

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Key Price Movers and Shakers

  • The U.S. palladium bar price rose 3.4% to $876 per ounce.
  • Our gold bullion price in the U.S. rose 1.8% to $1,268 per ounce. The China gold price also ticked up slightly.
  • The U.S. platinum bar price was up 2.3% to $939 per ounce.

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