Written Commentary
GOLD / SILVER
In our opinion, the gold and silver longs dodged a significant bullet overnight when the first of potentially many Chinese government rules designed to quell speculative trading in commodities was announced as gold and silver prices remained near 5-month highs. In fact, the move by China (the most dominating world player in many physical commodity markets) to stem price gains certainly reduces inflationary expectations throughout the world.
PLATINUM / PALLADIUM
The PGM markets traded in tandem yesterday (which is not the case this morning) with the palladium market this morning showing profit taking selling. We think the trade is convinced that the shift to electric vehicles or other newer generation modes of transportation will result in increased PGM consumption. Furthermore, with new technology being discovered and platinum trading nearly $1,600 an ounce discount to palladium, it is possible that new industrial uses for PGMs will prefer platinum over palladium.
COPPER
While it appears that the July copper contract has found value at the $4.50 level, that level is not yet a significant consolidation low zone and might not support prices against bearish Chinese developments. However, copper has not faltered in the wake of fresh Chinese regulation designed to limit speculation in commodities.
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