Written Commentary
PRECIOUS METALS
While gold and silver have recently lost their typical tight correlation with the dollar and US interest rate markets, both those outside market influences have shifted in favor of the bull camp and look to remain positive directly ahead. From an intermediate perspective, the four-week washout in gold and silver prices combined with a significant weakening of the dollar should add to the talk that February gold found good value at $2600, with silver finding value at $30.00. Not surprisingly, gold and silver ETF holdings showed little change in the latest daily readings as investors stepped back through the holiday. On the other hand, escalating tensions in Ukraine and accusations of violations of the Israel Hezbollah cease-fire deal have rekindled flight to quality buying interest. Underpinning Gold prices from a long-term perspective are persistent bullish Goldman Sachs price projections into 2025. In the end, bullish sentiment toward gold and silver remains cautious as both markets have had significant declines which likely wounded bullish sentiment.
COPPER
While LME copper continues to be in favor and US copper remains mired in a sideways consolidation, the international copper trade has recently upgraded its view toward the Chinese economy. Talk that Chinese exporters are aggressively ramping up shipments to avoid early 2025 Trump tariffs could be a stimulus for the Chinese economy which could finally bring their economy out of its malaise. Furthermore, Chinese air cargo activity has surged with reports of 3,485 cargo flights in and out of China last week, which is the highest reading since March 2023! However, this weekend China will release manufacturing and nonmanufacturing PMI data with expectations calling for those numbers to be mixed. Fortunately for the copper bull camp Chinese factory activity showed recovery in early November and prices have stabilized. In another minor, but apparently unimportant development this morning weekly Shanghai copper warehouse stocks posted another large weekly outflow of 11,461 tons for a one week decline of almost 10%. It should also be noted that Chinese aluminum, zinc, lead, and tin warehouse holdings declined.
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