Articles in Category: Precious Metals
U.S. and Canada

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This past week’s metals news covered everything from silver price movements to the copper price rise’s slowdown to the reimposition of tariffs on some Canadian aluminum.

We also broke down President Donald Trump’s recent proclamation with respect to reimposing the Section 232 tariff on some Canadian aluminum. MetalMiner’s Stuart Burns delved into the concern expressed by Ontario Premier Doug Ford: could Trump target Canadian steel next?

As our readers know well by now, Trump imposed Section 232 tariffs on imported steel and aluminum of 25% and 10%, respectively, in 2018. During the course of negotiations with Canada and Mexico over the United States-Mexico-Canada Agreement (USMCA) — the successor to NAFTA — the U.S. rescinded the tariffs in May 2019.

Now, at least for unalloyed aluminum from Canada, the tariff is back.

The Aluminum Association called the tariffs the “wrong approach.”

Furthermore, the tariff comes in a time when beverage makers are struggling with an aluminum can shortage.

For the buyers out there, if you are under pressure to generate cost savings in aluminum, steel or anything else, make sure you are following these five best practices.

But the tariff storyline is but one thread in the world of metals.

Before we head into the weekend, let’s take a look back at the week that was:

MetalMiner Week in Review, Aug. 10-14

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The Global Precious Monthly Metals Index (MMI) surged 9% for this month’s MMI value.

August 2020 Global Precious MMI chart

Surging gold price

The gold price recently soared to an all-time high.

The gold price is inversely correlated with the U.S. dollar. As such, it is worth noting the U.S. dollar recently fell to a two-year low.

The U.S. dollar fell to 93.23 as of Thursday afternoon.

Silver rises but could be headed for short-term weakness

Meanwhile, the silver price has also been on the rise longer term.

MetalMiner’s Stuart Burns has kept a close eye on the resurgent silver market in recent months.

“Early this year, the silver market was going through a tough time,” Burns wrote last month.

“Its reaction to the growing pandemic was in stark contrast to that of gold. The disconnect between the two metals rose to historic proportions, as gold rose on the back of deeply negative real interest rates and expectations, justified or otherwise, of rising inflation as a result of massive fiscal stimulus.”

Burns added the silver price could still have a ways to go.

“Silver’s case, apart from it underperforming its historic average, is the potential for it to be boosted by: the growing Chinese recovery driving demand for industrial consumption (particularly electronics and plating), its attractions as a safe-haven investment and supply constraints due to COVID-19 mining-related disruptions in Central and South America,” he added.

“One arbitrage doing the rounds these last few months was to sell gold and buy silver, largely on the historic disconnect between the two prices as gold soared and silver collapsed. But with economic activity improving and supply-side concerns not going away, silver’s continued rise has better prospects, regardless of the trajectory for gold or the fact the historic connection between the two has partially recovered.”

Silver slowdown?

However, the silver price could take a bit of a breather from its upward ascent.

In a followup post Wednesday, Burns explained why silver’s rise has slowed.

“Silver’s rise has been so dramatic over the last 30 days; a pullback is to be expected,” he wrote.

“In fact, silver bulls are said to be looking for short corrections to create more value to add to positions.

“Both gold and silver retrenched yesterday. Gold fell below $2,000/ounce, while silver dropped toward $27/ounce.

“But whether that will be enough to dampen spirits for a push higher in coming weeks will depend on the course of the dollar, indications on post-pandemic recovery and further action by the Fed regarding longer for lower interest rates.”

Palladium, platinum make gains

Gold and silver have made significant gains since the start of the pandemic: what about the rest of the precious metals complex?

Powered in part by recovering automotive sales, both platinum and palladium showed some life.

Palladium, for example, trended largely sideways from March through June. However, over July, the palladium bar price jumped over 5%.

It remains to be seen if the automotive market will continue in its recovery. As noted in the Automotive MMI report earlier this month, July automotive sales in the U.S. saw the recovery take a bit of a pause.

Automotive sales in China, meanwhile, have proved more consistently resilient.

According to China Association of Automobile Manufacturers (CAAM) data released July 13, June sales rose 11.6% year over year. The July sales figure marked the third consecutive month of year-over-year sales gains in China.

The three-month positive streak followed a March year-over-year decline of 43.3%.

Actual metals prices and trends

The U.S. silver price gained 34.5% month over month to $24.47/oz as of Aug. 1.

The U.S. platinum bar price gained 9.9% to $900/oz. Meanwhile, the palladium bar price jumped 5.3% to $1,973/oz.

The U.S. gold bullion price gained 11.0% to $1,976.10/oz. The Chinese gold bullion price jumped 8.5% to $61.39/gram.

silver price

Olivier Le Moal/Adobe Stock

Silver’s rise has been meteoric since its low in mid-March.

The precious metal’s surge has been particularly notable over the last month.

Both gold and silver have benefited from cheap money, a weak dollar and stronger oil prices. The yield on the benchmark 10-year U.S. Treasury note is presently around 0.57%, while the oil price is holding around $42 per barrel.

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Dollar’s slide drives commodities up

Driving all commodities higher, the U.S. dollar index has slipped nearly 7% in the last three-month period. Measured against six major currencies, the dollar is down nearly 9% from its March highs and is on track for its worst month since 2011, according to a Yahoo Finance report.

Other investment products, like Bitcoin, are also up sharply.

However, gold and silver have been stealing the headlines.

Investors are betting on gold going through $2,100/ounce shortly and silver to top $30/ounce.

Silver lining

Unlike gold, though, the fundamentals for silver have some decent legs.

The LME has operated the LMEprecious suite of exchange-traded contracts since 2017. In a recent update note, the LME reported industrial demand for silver last year topped 16,200 tons. Furthermore, demand is forecasted to increase thanks to its role as a component in antennae for the new 5G mobile network infrastructures being rolled out around the world.

Like gold, silver benefits from the jewelry market, which is expected to pick up as economies gradually recover from lockdowns. In addition, silver has a wide range of industrial applications, which are coming back fast — first in Asia, but now in Europe and the U.S.

Looking ahead at the silver price

Two weeks ago, analysts at Goldman Sachs lifted their 12-month forecast for silver to $30 per ounce by year’s end.

However, that prediction became within reach after just a fortnight.

The bank’s prediction was based largely on the back of an expected continuing weakness in the greenback. The analysts argued a further 5% decline is probable before the year’s end. On top of that, no end is in sight for rock-bottom interest rates.

Silver’s rise has been so dramatic over the last 30 days; a pullback is to be expected.

In fact, silver bulls are said to be looking for short corrections to create more value to add to positions.

Both gold and silver retrenched yesterday. Gold fell below $2,000/ounce, while silver dropped toward $27/ounce.

But whether that will be enough to dampen spirits for a push higher in coming weeks will depend on the course of the dollar, indications on post-pandemic recovery and further action by the Fed regarding longer for lower interest rates.

You’d be brave to bet against it.

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gold price rising

Are gold prices really going to keep rising? Source: Adobe Stock/Nikonomad.

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silver price

Olivier Le Moal/Adobe Stock

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, including coverage of silver prices, LME off-warrant stocks, cobalt-free lithium-ion batteries and more:

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USMCA

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Early this year, the silver market was going through a tough time.

Its reaction to the growing pandemic was in stark contrast to that of gold. The disconnect between the two metals rose to historic proportions, as gold rose on the back of deeply negative real interest rates and expectations, justified or otherwise, of rising inflation as a result of massive fiscal stimulus.

Read more

The Global Precious Monthly Metals Index (MMI) gained 1.7% for this month’s reading.

Read more

athitat/Adobe Stock

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