Our Global Precious Metals MMI inched up a point in April. However, this year the index seems to be struggling near 84 points. Let’s take a look at gold and palladium, […]
Tag: global precious metals
Our March price trends report, which analyzes the entire month of February’s price data from the MetalMiner IndX, shows robust price increases in metals markets that are still running with the bulls.
Our Stainless MMI led the pack, increasing 6.8%, but the copper, raw steels, aluminum and rare earths sub-indexes all showed strong gains, as well.
One area of concern this month is that oil prices have fallen back below $50 per barrel as U.S.
shale producers beat expectations by adding 8.2 million barrels to existing reserves. Low oil
prices would benefit metals producers by keeping energy and transportation costs lower, but
they also may drag down other commodities with them.
We don’t usually see investment metals such as platinum and gold increasing at the same time
as base metals, either, but positive sentiment about the economy had both increasing this month. So, until we see anything that points otherwise, a rising tide is still lifting all the (metals) boats.
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The World Platinum Investment Council‘s bullishness on platinum as a key investment and industrial asset, which we reported on last fall in an interview with the Council’s Director of Research Trevor Raymond, seems to be bearing fruit as we approach the end of Q1.
Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up
Platinum bar prices and a couple other precious price points led MetalMiner’s Global Precious Metals MMI to rise 2.4% for March 2017, landing at a value of 84.
Indeed, the U.S. platinum bar price, up by nearly 3% this month, has been on an upward trajectory for the past three months, starting the month out above the $1,000-per-ounce level for the first time since October 2016.
A Focus on Platinum
Worries over supply shortages of the namesake of platinum group metals (PGMs) are still behind the investment opportunities that the WPIC foresees — so much so that the Council is pushing new initiatives on two separate global fronts.
Although holdings of platinum-backed exchange-traded funds (ETFs) fell to their lowest since mid-2013 last October, Reuters reported that WPIC “plans to launch an ETF in China, the world’s biggest consumer of the precious metal, and a coin-based fund in Europe in 2017,” according to an executive of the council.
“We are working on two deals in China for investment products. (An) ETF and retail platinum bars with a big state-run enterprise,” Marcus Grubb, director of market development at WPIC, told Reuters. The ETF itself was formed by leading platinum producers to develop investor demand for the metal, according to the news service.
Grubb told Reuters that India’s platinum jewelry sales are rising by 25-30% a year. The PGM’s star has been rising on the subcontinent, with some questioning whether it will overtake gold as the go-to in jewelry demand in India (which is the world’s second-biggest gold consumer, so not likely anytime soon…but still).
The council will also launch a $50 million coin-based platinum fund in Europe, he told Reuters.
Auto Market Fine…For Now
It helps that car sales still appear to be cruising along, even if at, well, only cruising speeds. Even though U.S. car sales dropped 1.1% in February over the same month last year, total vehicle sales in China, including trucks and buses, came in 0.2% higher year-on-year to 2.5 million units.
But, as my colleague Jeff Yoders reported, China is also entering the planned final year of a major government automotive purchase rebate which could affect sales as the incentive winds down. What this will mean for platinum use in vehicles remains to be seen.
The Supply Game: Latest Producer Moves
Back to the supply side. Shortage concerns have recently caused companies such as South Africa’s Northam Platinum Ltd. to buy up more platinum assets including mines, in this case from Glencore, Reuters reports.
Glencore’s Eland mine, containing some 21.3 million ounces of the metal, play into the Northam’s long-term production strategy — which, of course, banks on continued demand and higher platinum pricing.
Two-Month Trial: Metal Buying Outlook
However, Northam said that the global economic outlook and low-dollar metal prices “remain a concern for them, at a time when it faces increasing power and labor costs,” according to Reuters. As of this writing, $1 = 13.08 rand, worse than last month.
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.
The PGM has been making higher highs and lower lows since January, and hit above $700 per ounce at the beginning of August.
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.
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.
Six little letters have dominated the political and economic news cycle over the past month or so: BREXIT. While the long-term effects of Britain’s vote to exit the European Union won’t be felt for awhile, the surprising result has already roiled global markets, including commodities in general and metals specifically.
Our biggest winner of the Monthly MMI series, the Global Precious Metals MMI, gained the most from June to July, primarily driven by gold prices (themselves driven by near-term investor moves over to safe-haven assets brought on by the Brexit vote).
Some have indirect Brexit connections, such as our Renewables MMI and the consequences of the U.K. announcing it won’t make E.U. 2020 climate reduction goals… which it won’t need to if it completes its exit before 2020 (likely). Others, like our GOES MMI, were not affected at all.
The value of the U.S. dollar, China’s import/export activity, and international trade cases (especially those in the ferrous realm should continue to be watched by industrial metal buyers during these dog days of summer. However, we wish our British colleagues well in these politically uncertain times and offer our recent webinar to help them navigate the newly choppy purchasing waters.
[download-button url=”https://agmetalminer.com/monthly-report-price-index-trends-july-2016″] Free Download the July MMI Report[/download-button]
With eight of our 10 monthly MMI sub-indexes gaining, and even the other two holding their value, April was the most positive month we’ve seen since 2014. We felt a […]
Just like Oprah giving out cars, our January Metal Price Trends report was generous with the dead cat bounces this month. You get a dead cat bounce, copper! You get one, too, aluminum! You get a dead cat bounce, raw steels! Everyone gets a dead cat bounce!
Okay, not everyone. Construction, stainless steel, renewables and rare earths all lost ground and automotive was merely steady.
Still, it’s the most positive movement we’ve seen for many of these metals since early last year. We say they’re dead cat bounces — a cruel-sounding investment term for a temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend (sorry, kitties) — because there is little reason to be optimistic that any of these gains will continue.
Stop Me Before I Bounce Again!
The main driver of commodity, and now stock market losses, has been the slowing Chinese economy and it’s looking worse this year than it did at the end of last. Financial institutions such as RBS are even advising clients to sell everything, save bonds, that’s not tied down.
This is great news for buyers but exactly what metal producers don’t want to hear. What’s worse, for them, is that everything the Chinese government is doing to try to turn their economy around, including a panic button system for its stock markets that actually caused more panic, isn’t working. My colleague Raul De Frutos also pointed out that purposely devaluing the yuan actually hurts metal prices.
How Low Can it Go?
The other big driver of the commodity price rout, the price of oil, shows no signs of turning around, either. Oil hit $30 per barrel this week stoking bankruptcy fears among US energy companies and it even temporarily created some nervousness among OPEC nations who clamored for an emergency meeting.
So don’t expect these price increases to continue as transportation and production costs follow oil’s race to the bottom. My colleague at our sister site Spendmatters, Kaitlyn McAvoy, reported that Goldman Sachs is predicting $20 per barrel for oil this year. It’s not a very happy new year for metal producers… or cats.
[download-button url=”https://agmetalminer.com/monthly-report-price-index-trends-january-2016/”] Free Download: The January MMI Report[/download-button]
We thought 2014 was over? The bear market seems to have followed us into 2015.
The fall in oil prices that began last year has battered the base and industrial metal sectors this month and the investment metals didn’t fare much better in MetalMiner’s Monthly MMI®. All but 3 indexes fell, including the previously fundamentally strong ones: Aluminum, the Stainless MMI and Global Precious.
Each month, MetalMiner publishes an MMI® report that contains 10 metal indexes that take into account our global metals economy — three of which examine underlying metals markets supporting the […]