Silver's “fractured market” with low investor demand

In the Lead: “Silver’s cloudy lining”

Platinum gained $2 to open at $1,548 per ounce while palladium lost $1 to ease to $588 the ounce this morning. Rhodium remained at $1,650 after having shed $25 in the previous session. Swiss Customs data released this morning shows platinum imports to have totaled 2.36 tonnes in October versus September’s 6.33 tonnes. Palladium imports amounted to 368 kilograms versus more than ten times as many in September.

Metal Miner’s Taras Berezowsky points out that “In a recent FT article, Johnson Matthey forecast that palladium would trade at an average of $650 per ounce over the next six months, and platinum to trade at $1,650 per ounce during the same time period. Russian agency Gokhran, the body in charge of selling Russia’s infamous palladium stockpiles, announced they would drastically reduce stockpile sales to 145,000 ounces next year – a more than 400 percent decrease – according to the article. In the short-term, however, investors have been selling off; physical palladium ETFs will sell 215,000 net ounces of palladium, whereas they bought 1.1 million ounces last year.”

To say that global conditions remain fragile pretty much everywhere one cares to look is to understate things by some margin. Yes, the US economy grew by 2% in the third quarter, but that figure constitutes a half-percent scaling back from previous estimates. Yes, Moody’s reaffirmed the ratings of the US but the unraveling of the congressional committee (there really isn’t anything ‘super’ about it) actually poses a material threat to America’s economy in the near-term. Bloomberg notes that “The committee’s failure to reach a deal means several tax programs, including a payroll tax holiday, risk expiring at the beginning of next year, weighing on the household spending that accounts for about 70 percent of the world’s largest economy.”

Yes, France still has its AAA rating as of this morning, but the bond market sure isn’t trading the country’s debt as if it had such a coveted crown. Monday’s Moody’s warning that the nation could lose part of that alphabet soup is still reverberating in the markets. GFT Forex analyst Kathy Lien cautioned that “a downgrade of France would cause far more carnage on the market than a downgrade of Spain or Italy, even though it would all be extremely bad on the market.”

Yes, China is still growing but witness its stock market dropping for a fifth session on the anxiety resulting from caving property investment, slowing exports, and a World Bank warning that short-term risks to growth are omnipresent. East Asia in general (excluding China) will grow at a projected 4.7% rate this year, and that is lower than the previous estimate of 5.3%. Some investors have begun shifting funds out of Asian countries and BRICs in general lately.

A while back we reported on the environmental disaster that large-scale gold mining is bringing about in Peru’s forests. We leave you today with a piercing insight into Colombia’s new “drug” of choice: gold. Forget cocaine, that’s so…80’s. The drug barons of the country have shifted their efforts (and millions) into what is apparently more profitable and…much easier to “move.” This four minute BBC video clip shows you just what gold fever has engendered and why the mob is so fascinated with the yellow metal.

Stunning.

Until tomorrow,

Jon Nadler is a Senior Metals Analyst at Kitco Metals

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About the Author
Jon Nadler Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America
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