Written Commentary
PRECIOUS METALS
Gold & Silver:
While we have not attributed a large component of the historic rally in gold and silver prices over the last year to flight to quality, that theme is becoming more prevalent by the day. However, news that investors are rotating from US equities into global mining shares adds a fresh bullish force especially with growing fears of a falling dollar. In addition to growing investment interest in mining shares, both gold and silver ETF holdings are seeing aggressive daily inflows again with silver ETF holdings in just two sessions this week adding nearly 20 million ounces while gold ETF holdings have seen four straight daily inflows of 675,000 ounces. Relatively speaking the inflows to gold ETF holdings are more massive than in silver and clearly suggest investors are moving back into gold in force. In addition to bullish internal fundamentals, both gold and silver are garnering support from the prospects of a lower dollar, growing prospects of European and Japanese rate cuts, lingering concerns of a US missile strike of Iran and falling US treasury yields.
BASE METALS
The sharp range-up and highest trade since February 11th in March copper this morning is quite surprising given that Shanghai copper warehouse inventories jumped by a startling 119,054 tons or 43.7% in the weekly report. While a portion of the massive jump in inventories can be explained by the lack of data from the holiday or simply the backing up of business activity from the holiday, there is no denying a massive rebuilding of global copper exchange warehouse supply. It should be noted that current Shanghai copper stocks are 391,529 metric tons compared to inventories at the beginning of December of only 88,905 metric tons. It should also be noted that LME copper warehouse stocks at present are 234,550 metric tons compared to copper stocks around 90,000 metric tons in 2025. Lastly, it should be noted that COMEX copper stocks have exploded from 83,876 tons to 535,000 tons over the last 12 months.
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