Articles in Category: Precious Metals

The Global Precious Monthly Metals Index (MMI) rose by 4.1% for this month’s reading.

January 2022 Global Precious MMI chart

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Gold prices make gains to close 2021

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Gold prices picked up steam throughout the final month of 2021.

The U.S. gold spot price opened December at $1,774 per troy ounce, according to MetalMiner Insights data (MetalMiner Insights added a precious metals suite last year). The price rose to $1,818 per troy ounce to close the year.

Since then, the price has continued to rise, reaching $1,825 per troy ounce last week.

Meanwhile, the U.S. dollar, which typically has an inverse relationship with gold, moved mostly sideways in December. After opening December at just over 96, the U.S. dollar index fell marginally to just under 96.

Treasury yield rates rise in December

Elsewhere, U.S. Treasury yield curve rates picked up in December.

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The Global Precious Monthly Metals Index (MMI) fell 4.7% for this month’s MMI value, as gold prices slipped to close November.

December 2021 Global Precious MMI chart

MetalMiner has launched a full suite of precious metals as part of the MetalMiner Insights platform. 

Gold price ups and downs

gold price

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As MetalMiner Insights subscribers may have noted — the Insights platform now offers a suite of precious metals price points — the U.S. gold bullion price surged in the middle of the month before falling back.

After opening the month at $1,784 per ounce, the U.S. gold bullion price surged to $1,867 per ounce by mid-month. However, the price backtracked down to $1,785 per ounce as of the start of December.

Meanwhile, the U.S. dollar, which historically correlates inversely with gold, picked up momentum in November. After falling to just over 93 to close October, the U.S. dollar rose as a high as 96.88 as of Thanksgiving. Since then, the dollar fell closer to 96 before trading sideways.

Inflation at nearly 40-year high

Earlier this month, the U.S. government reported the Consumer Price Index for the last 12 months increased by 6.8%. Inflation is at its highest level in nearly 40 years.

According to the Bureau of Labor Statistics, the 12-month increase marked the largest jump since June 1982.

Gold prices also posted gains Friday on the heels of the latest inflation report.

Meanwhile, elsewhere in the inflation report, higher energy prices continued to weigh on consumers.

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Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner, including softening steel prices, the House’s passage of the over $1 trillion infrastructure bill and more:

steel production

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Week of Nov. 8-12 (steel prices, infrastructure bill and more)

  • Limited inventory and semiconductor shortages continue to weigh on U.S. automotive sales.
  • The House of Representatives voted to pass the Infrastructure Investment and Jobs Act last Friday. President Joe Biden will sign the bill during a ceremony Monday, Nov. 15.
  • MetalMiner’s Nichole Bastin delved into recent copper market trends.
  • Steel prices have started to soften.
  • Earlier this week, we broke down the infrastructure funding categories within the Infrastructure Investment and Jobs Act.
  • U.S. steel capacity utilization fell to 83.4% last week, the American Iron and Steel Institute reported.
  • Meanwhile, U.S. construction spending dipped in September, the Census Bureau reported.
  • A strong aluminum market has been a boon for Novelis, as reflected by its most recent quarterly report.
  • The Consumer Price Index rose by 0.9% in October, the Bureau of Labor Statistics reported. Furthermore, the index is up by 6.2% over the last 12 months.
  • The Greenland parliament this week voted to ban uranium mining and exploration, effectively halting the Kvanefjeld project.
  • Automotive sales in China fell by 9.4% year over year in October, the China Association of Automobile Manufacturers reported.
  • The Global Precious MMI rose by 5.8% for this month’s reading.
  • Lastly, German firm Aurubis AG announced plans to invest €300 million to build a metals recycling plant in the U.S.

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The Global Precious Monthly Metals Index (MMI) rose by 5.8% this month.

November 2021 Global Precious MMI chart

MetalMiner has launched a full suite of precious metals as part of the MetalMiner Insights platform. 

MetalMiner launches precious metals suite in MetalMiner Insights

In case you missed it, MetalMiner has launched a full suite of precious metals as part of the MetalMiner Insights platform.

This includes a complete suite of catalytic converter precious metals, which are particularly useful for automotive end-use applications.

For gold and silver watchers, the new offerings include short- and long-term forecasts for gold and silver.

Visit the MetalMiner Insights landing page for more information.

Gold price gains

Speaking of gold, the U.S. gold bullion price made some gains in October.

After opening the month at $1,757 per ounce, it opened November at $1,784 per ounce. The gold price has continued to gain in November, closing Nov. 10 at $1,832 per ounce.

Meanwhile, the U.S. dollar, which historically correlates inversely with gold, lost some ground in October. After opening the month just over 94, the U.S. dollar index slipped just below that mark to open November.

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In the first part of this series, we discussed monetary inflation, the history of gold as a store of value and how digital assets, like Bitcoin, may be the next big thing in the technology of money.

Bitcoin and gold

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The narrative of gold being the premier store-of-value asset has captivated like-minded investors for centuries. In this follow-up piece, we will compare gold and Bitcoin across the first three properties of sound money: portability, uniformity and divisibility.

MetalMiner has launched a full suite of precious metals as part of the MetalMiner Insights platform. This includes a complete suite of catalytic converter precious metals, which are particularly useful for automotive end-use applications.

Portability

An important part of any money is one’s ability to transport it across space and time. What good is any form of money that you can’t bring with you?

The portability of gold largely depends on the quantity one owns. For example, a few gold coins are extremely portable and can be stored in a wallet or a pocket. However, a larger investor will have more trouble moving large quantities.

Gold is currently trading at approximately $1,800/oz. An investment of $180,000 in gold weighs in at around 6.25 pounds. Meanwhile, an investment of $1.8 million weighs 62.5 pounds (and so on). A wealthier individual might not care as much about transportation costs. However, the larger the gold investment is, the more difficult and costly it will be to send across the world.

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$3,623,000,000,000 — that is the increase of M2 money supply in 2020.

By now, there should be no surprise what the effect of printing 23% of total USD has on commodity markets.

Store-of-value assets Bitcoin and gold

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Aluminum breached $3,000 per metric ton this week. Carbon steel price action is only now seeing moderate relief after what seemed to be a never-ending spike since August 2020.

Due to everchanging price increases, some manufacturers now face quotes that expire within 24 hours of issuance. It’s fair to say that the general MetalMiner audience has felt the pain of monetary inflation in some form or another.

M2 money supply chart

M2 money supply. Souce: Board of Governors of the Federal Reserve System (discontinued by the Fed since February 2021)

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Gold as a store of value

While MetalMiner’s expertise is primarily in base metals, we also like to keep a close eye on larger macroeconomic factors.

Avid readers of our market updates are familiar with occasional articles on oil, tariffs, and precious metals, such as gold.

During times of rapid inflation, gold has historically served as the primary vehicle among store-of-value assets for institutional investors — and for good reason.

The physical properties of element 79 make it practically indestructible. Unlike the dollar, gold also has a high stock-to-flow ratio due to steady mining activity.

Considering all of this, it’s questionable how gold has stayed relatively flat for the last year.

During the past 15 months, the dollar has trailed down nearly 5%. Meanwhile, gold has barely moved a percent compared to the price in June 2020 and previous all-time highs in 2012.

So, what’s the deal here? Is another speculative asset taking market share from gold? Or is this simply a market irregularity?

As the headline suggests, there’s a mysterious trillion-dollar elephant in the room: Bitcoin.

Rise of Bitcoin

Whether through general media conjecture or more focused education, the “B word” has no doubt permeated the minds of investors since the beginning of the COVID-19 pandemic. A 900% increase during an 18-month period is going to turn heads, one way or another.

The Bitcoin community often uses the expression “digital gold” due to the striking similarities of its properties to gold. Parallels in terms like “mining” are easy enough to spot.

But what is it that makes them similar in principle?

Historical gold price chart

Gold fixing price in London bullion market, based in U.S. dollars. Source: ICE Benchmark Administration Limited via Federal Reserve Economic Data

A brief history of metals as money

When looking at the history of civilizations, money has come in many forms: beads, salt, cattle, etc.

The core reason why all of these failed as monetary vehicles is largely due to ease of production. For example, if a small colony used rocks as a form of money, mining stone quarries could significantly increase the supply with minimal effort (i.e., inflation). As stone production was accessible even for ancient civilizations, the value of the stone is drastically devalued upon each new quarry founded, akin to the dollar devaluing upon each new dollar printed by the Federal Reserve.

As time progressed, societies introduced sounder forms of money. In fact, the term “sound money” stems from the sound gold made when dropped from a distance.

When metals became the primary usage of money, gold soon became the global monetary standard due to its core properties. Gold requires drastically more energy and resources to mine, making new production more difficult than other materials. The longevity of gold’s uniformity also provides assurance that it will not corrode or deteriorate over time. The sound money principles of scarcity and durability are the foundations of what made gold attractive as a store-of-value asset. It is also why countries have used it as a monetary standard for centuries.

However, in 1971, the United States officially got rid of the gold standard. Thus began the era of unbacked fiat currency.

Money in the digital age

The 21st century is what some might call the digital age.

In the past 10 years, we’ve witnessed the dematerialization of everyday things into a digital realm: photos on Instagram, music on Spotify, social interactions on Facebook, video on Netflix, and the power to access and distribute all of this to 7 billion people with smartphones and computers.

When Bitcoin was introduced in 2009, it began with modest roots at a market cap of only a few hundred dollars.

Today, Bitcoin stores over $1 trillion dollars’ worth of value. It is now accepted as legal tender in the country of El Salvador.

Blockchain, the technology upon which Bitcoin is founded, presents the idea of money itself dematerializing into digital, decentralized and trustless networks.

Over the course of the following weeks, we will candidly explore the similarities and differences between gold and Bitcoin across the six properties of sound money: durability, portability, uniformity, divisibility, scarcity and acceptability.

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Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner, including aluminum prices, rising power costs and much more:

Each month, MetalMiner hosts a webinar on a specific metals topic. Explore the upcoming webinars and sign up for each on the MetalMiner Events page.

Week of Oct. 11-15 (aluminum prices, power costs and more)

aluminum price

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The Global Precious Monthly Metals Index (MMI) lost ground this month, dropping by 12.9% as the gold price declined and the dollar strengthened last month.

October 2021 Global Precious MMI

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Gold slides, dollar gains

The U.S. gold bullion price fell in September, dropping from $1,814 per ounce as of Sept. 1 to $1,757 on Oct. 1, a 3.1% drop.

Meanwhile, gold historically correlates inversely with the U.S. dollar. Unsurprisingly, the U.S. dollar showed strength in September.

Last month, the Federal Reserve indicated it could soon finally begin tapering asset purchases, which is supportive for the dollar.

After closing Sept. 1 at 92.45, the U.S. dollar index closed Oct. 1 at 94.03.

Fed could begin tapering

As mentioned, the Federal Reserve last month indicated it could be set to begin tapering asset purchases.

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The Global Precious Monthly Metals Index (MMI) fell by 4.2% for this month’s reading, as the gold price took losses early in the month before bouncing back.

September 2021 Global Precious MMI

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Gold price recovers

gold price

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The gold price bounced back after falling to around $1,730 per ounce in early August.

From there, the U.S. gold bullion price rose to $1,815 by the end of the month.

Meanwhile, the U.S. dollar, which typically has an inverse correlation with gold, picked up in the first two-thirds of the month. The dollar index peaked at 93.57 on Aug. 19 before retracing, closing the month at 92.63.

In other relevant indicators, 30-year Treasury bond yield rates opened August at 1.86% and climbed to a high of 2.03% on Aug. 12 before retreating. The 30-year yield rate closed the month at 1.92%.

Thus far in September, the 30-year yield has continued to retreat, closing Tuesday, Sept. 14, at 1.85%.

Meanwhile, the 10-year yield opened August at 1.20% before closing the month at 1.30%.

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner:

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Week of Aug. 9-13, 2021 (copper market, steel capacity utilization and much more)

copper mine

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