Multiple firms interested in LME silver fix

Yesterday, Bloomberg reported that the London Metal Exchange intend to have a testing process to replace the London silver fixing benchmark ready two weeks ahead of the August deadline. Despite a very prompt reaction from Twitter users saying that the LME should just end the fixing, there are apparently three solutions and suggestions in place.

While just two firms would be left running the current fix, the Bank of Nova Scotia and HSBC, the LME reported that 10 firms have expressed an interest in helping run the new silver fix.

ETF Securities are bullish on silver. In a note released yesterday, they explained that while silver has risen with gold, its industrial qualities will help it rise over the coming months.

“With the most recent data from China showing signs of a rebound and the reserve ratio cuts by the PBOC (People’s Bank of China) adding to potential momentum, we expect cyclical commodities like silver to continue to benefit.”

Gold

Having hit a three-week high of $1,284/oz., this morning's gold price fall comes alongside profit taking and upbeat U.S. factory and builder sentiment data.

Later today, the Fed’s FOMC meeting will begin and markets will be looking for any pointers on when the committee intends to raise interest rates.

Gold's climb to a recent high comes thanks to safe haven purchases on the back of the situation in Iraq. It is not surprising that there was some profit taking yesterday, as gold had climbed in the previous seven sessions by nearly 4%. This rapid climb indicates investors are not so convinced about the stability of the financial and political structures.

While conflict concerns in Iraq are likely to provide some support for the gold price, it's unlikely to be sustained as central banks’ monetary policy returns should take center stage for the rest of the year. Should the U.S. and its allies announce military steps, we will see a climb in the gold price, though this will not be a gain that will hold for long either.

Holdings in the SPDR Gold Trust saw their biggest decline since mid-April yesterday. There were outflows of 4.2 tonnes. Total holdings now sit at 782.88 tonnes; a near five year low.

Platinum and palladium

Both platinum and palladium continue to make gains as markets await to see if a deal has been reached between mining companies and AMCU.

Last Friday, strong indications were given that a deal was imminent. There were some media reports yesterday that AMCU’s president, Joseph Mathunwja, had been forced to accept a wage deal and that workers were expected to return to work today.

About the Author

Jan Skoyles is Head of Research at The Real Asset Company, a platform for secure and efficient gold investment.