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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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This morning in metals news: U.S. Steel plans to restart another blast furnace at its Gary Works; imports of blooms, billets and slabs from Japan have seen a significant jump this year; and silver prices have surged to a seven-year high.

Read more

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

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Something peculiar is going on in the precious metals markets.

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It is rare that companies with a professional reputation like those of Thomson Reuters and the CME Group compete for the privilege of running such an important price benchmark as the London Silver Fix, a global benchmark that has been in place 117 years and has its origins in the London coffee shops of the 1700s. Even more rare? To announce after three short years they are stepping down from providing that service.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

CME Group and Thomson Reuters assumed control of executing the daily Silver Price Fix on Aug. 14, 2014, from the London Silver Market Fixing Company. CME Group has been providing the electronic auction platform on which the price is calculated and Thomson Reuters has been responsible for administration and governance of the LBMA silver price both our own Jeff Yoders and Reuters reported. So why, once a suitable replacement can be found, are the two firms stepping down from their respective roles in running the LBMA Silver Auction?

The simple truth seems to be that they are not making any money out of it. According to MarketWatch, new European legislation set for implementation in January 2018 will regulate the provision of, contribution to and use of a wide set of benchmarks which are highly regulated and deeply scrutinized, the site quotes Ross Norman Chief Executive Officer of Sharps Pixley Ltd. as saying.

“It follows there is much work and cost, but for very modest commercial reward, plus the ever-present danger of legal action or reputational damage — whether guilty or not.” Norman said. ‘Few sensible or sane people would want to create a financial benchmark — and, yet, it is absolutely necessary for the normal functioning of markets.”

You should ask, if that is the case, and Ross Norman probably knows better than anyone, who is going to take it on?

One site valued the total of above-ground silver holdings at approximately 1 billion ounces, putting the physical value at some $17 billion, but Bloomberg assessed the total silver-based financial market at closer to $5 trillion, much of which takes its price cue from the London Fix. It seems inconceivable that one of the major banks, or a number of them in cooperation, that currently contribute to the LBMA silver price will not step in to take over.

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If they don’t, the Silver Fix could conceivably migrate to Shanghai in the same way that the center of gravity for gold price-fixing has been gradually migrating east over the last decade.

CME Group and Thomson Reuters will step down from providing the LBMA silver price benchmark auction, the London Bullion Market Association said on Friday, less than three years after they successfully bid to provide the process.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

“In consultation with the LBMA, CME Group and Thomson Reuters have decided to step down from their respective roles in relation to the LBMA Silver Price auction,” the LBMA said in a members update seen by Reuters.

The two will continue to operate and administer the silver auction until a new provider is appointed, the LBMA said. It will launch a new tender to appoint an alternative provider to operate the process “shortly”, it said.

“We would be looking to identify a new provider in the summer, and have the new platform up and running in the autumn,” an LBMA spokesman said.

The two companies launched the LBMA silver price in August 2014 to replace the telephone-based London silver “fix,” which had been in operation for more than a century, with an electronic, auction-based and auditable alternative.

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CME Group provides the electronic auction platform for the benchmark, while Thomson Reuters is responsible for administration and governance. The LBMA owns the intellectual property rights.

Philippines Might Consider Indonesia-Style Ore Export Ban

The Philippines may consider banning exports of raw minerals to encourage domestic processing and boost the value of shipments, an environment official said on Friday, as the government looks to extract more from its mining sector after a crackdown.

We warned last month that the mostly small losses the prices our MetalMiner IndX experienced were caused by investors taking profits.

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Our suspicions were confirmed when almost all of our sub-indexes had big price rebounds this month. The Automotive MMI jumped 12.2% Raw Steels 8% and Aluminum 6%. Even our Stainless Steel MMI only dropped 1.7% and has taken off since February 1 as nickel supply is even more in question now with both the Philippines and Indonesia’s raw ore exports in question.

The bull market is on for the entire industrial metals complex. Last month’s pause was necessary for markets to digest gains but the strong positive sentiment for both manufacturing and construction shows no signs of ebbing in the U.S. and Chinese markets.

Our Global Precious Metals MMI took a slight step backward this September, coming in at a value of 85 — a 4.5% drop from the previous month’s 89.

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However, the latter half of the summer has been kind to the gold, silver, platinum and palladium prices we track, with the past three months representing the highest MMI values of the entire calendar year.

All four precious categories tracked by the MetalMiner IndX softened over the month of August for our September 1 reading, contributing to the overall 4-point decline.

Main Index Drivers: Platinum and Palladium Prices

In a forthcoming MetalMiner analysis, my colleague Stuart Burns will share his findings from interviewing Trevor Raymond, director of research at the World Platinum Investment Council. The main takeaway? That the platinum market is like a “ticking time bomb.”

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Essentially, the global platinum market has been in deficit for five years running, with mine strikes and shortfalls leading the way into a supply-side headache for the industry. Demand, meanwhile, appears robust, according to WPIC’s data and quarterly reports, led by developments on the heels of Volkswagen‘s diesel scandal, China and India’s jewelry desires, and a potentially interesting knock-on effect from rising oil prices. Read more

After hitting a new all-time low last month, the monthly Global Precious Metals MMI® bounced back up a bit to catch its breath, and registered a value of 76 in September, an increase of 2.7% from 74 in August.

So What’s At Play? Gold Prices and Fed Hikes?

Yesterday, Reuters reported that spot gold prices lost more ground, after drifting downward the past several days.

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The precious metal was “hurt by a stronger dollar and as investors awaited a key US jobs report to gauge the timing of a Federal Reserve rate hike” – however, the global stock market [expletive]-show that has been rocking investor confidence lately may just be the only thing the Fed needs to go through with the hike.

(Besides, ADP‘s private-sector jobs report, released this past Wednesday, betrays severe underperformance – fewer than 200,000 jobs have been added in 6 of the last 8 months, as mentioned here.) Read more

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.

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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).

RELATED: 3 Best Practices for Buying Commodities

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:

Palladium price since 2013. Graph: MetalMiner.

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?

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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.

Free Download: Compare With the July MMI Report

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.

And Platinum?

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.

Wild Card

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%.

* Get the complete prices every day on the MetalMiner IndX℠

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.