Silver fix is broken

Yesterday saw the heaviest loss of life in Ukraine since the conflict began, when Ukrainian troops were ambushed by pro-Russian separatists. Moscow has retaliated against U.S. sanctions by hitting various projects, one of which is the International Space Station which the Russian government is refusing to extend the life of.

Gold (COMEX:GCM14) and silver (COMEX:SIM14) both continue to be underpinned by the crisis in Ukraine, but both found strong support in yesterday’s environment, as the price of gold shot above $1,300/oz. However, as UBS noted yesterday, pressure on both metals is thanks to the stronger U.S. dollar, ETF outflows and the expectation that the E.U. will cut interest rates next month.

In India, the local gold price is climbing as wedding season gets into full swing and the demand for physical gold climbs. The silver price in the country also climbed yesterday, this was apparently due to coin-makers ramping up demand. Earlier in the week hopes were raised that gold import restrictions would be lifted should opposition party BJP have won the national election. This is despite there being no mention of gold in the party’s manifesto.

Of course the big news in the precious metals space, this morning, is the stopping of the silver fix by London Silver Market Fixing Ltd. This has taken many by surprise; however a major shake-up in the precious metals price fixing space was well overdue given the regulatory scrutiny, industry criticism and changing nature of the gold and silver market.

Platinum (NYMEX:PLM14) and palladium (NYMEX:PAM14) continue to outshine both gold and silver due to worries that the violence surrounding industrial action in South Africa could impact negatively upon supply. The country is the world’s largest platinum producer. Sanctions placed on Russia will also have a positive impact on the palladium price. The palladium price is now at its highest since August 2011.

About the Author
Jan Skoyles

Jan Skoyles is Head of Research at The Real Asset Company, a platform for secure and efficient gold investment. Her work and views are now featured on a range of sites including Kitco, GATA, and The Telegraph. She has appeared on news channels including Russia Today to discuss the gold price and gold investing. You can keep up with Jan's commentary by subscribing to our RSS feed Gold Investment News.

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