Written Commentary
GOLD & SILVER
While the October gold contract failed to technically take out yesterday’s high in the early going today and in retrospect stalled right on psychological even numbers of $1800, the bias remains up. Clearly, the primary impetus behind yesterday’s sharp rally was increased geopolitical tensions between the US and China, which resulted in Chinese ballistic missiles overflying the Taiwan capital city! Not only were gold and silver futures in vogue yesterday, but investors moved money into gold and silver mining shares. Unfortunately for the bull camp both gold and silver ETF holdings saw outflows yesterday of 81,050 ounces in gold (year-to-date gold holdings are now up only 3.3%) with silver seeing an outflow of 352,347 ounces.
PLATINUM & PALLADIUM
In a supportive overnight development Implats reported a 3.6% decline in gross platinum concentrate volumes and a 5.6% decline in gross refined mining volumes in their latest fiscal year. The net reduction in production from Implats for the year was very material to the market considering the overall output at the company was 3.17 million ounces. It should be noted that the PGM markets traded strong yesterday despite an analyst poll cutting the outlook for PGM demand and calling for reduced PGM prices. While the latest US vehicle sales reading posted 3-month highs, residual concern for the Chinese economy and an unrelenting outflow from PGM ETF holdings should provide some fundamental resistance to further price gains.
COPPER
While the copper market ranged down again to the lowest levels since July 27th yesterday, the market was able to aggressively reject that slide and at times managed to trade $0.08 above the initial low. Furthermore, the September copper contract early this morning extended yesterday’s bounce with a fresh 3-day high. Going forward, the copper market should be supported following headlines indicating that $500 million worth of copper was “missing” in China.
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