G7 Ban of Russian Gold?

GOLD & SILVER

While a G7 decision over the weekend to ban Russian gold imports should provide support to gold prices, the trade is hesitant to factor tightening supply in the wake of the abject failure of the oil embargo. In other words, seeing G7 countries prohibit Russian gold imports likely means Russia will increase exports to other non-G7 countries with some of that supply ultimately flowing into G7 countries. About the most positive issue for silver is the market’s ability to rebound from a very significant washout last week.

PALLADIUM & PLATINUM

While it is possible that PGM prices could see support from the G7 move to ban the import of Russian gold, a specific ban on the import of Russian PGM is not looming. However, Western countries have not been able to halt the export of Russian oil which is obviously much more difficult to engineer given the bulk of supply to be moved. In fact, shipping PGM supply through 3rd parties into countries deciding to embargo Russian supply should be very easy especially when one considers how much monetary value can be transported in a single vehicle! Certainly, given the situation in Russia, the threat against supply cannot be totally discounted and therefore we see value at the $1,750 level on the charts. While the net spec and fund long position in platinum is not as oversold as the palladium market, we see the net spec and fund long adjusted to the low last Friday (a decline of $39) approaching zero!

COPPER

In addition to spreading global recession fear, the copper market remains under pressure because of severely damaged charts and news of a moderation of protests around a Chilean copper mine. While the copper market has not been concerned with supply flow throughout the month of June, seeing the Codelco Chairman reaffirm their annual production target of 1.7 million tons should discourage bottom picking.