Written Commentary
GOLD / SILVER
In retrospect, the upside action in the precious metals complex this week has been extremely discouraging to the bull camp, as Russian Foreign Minister comments regarding the potential for a nuclear war should have ballooned prices. However, the dollar continues to be uber strong thereby discouraging a portion of would-be gold and silver buyers. As if the bear camp needed additional ammunition Chinese first quarter gold consumption fell by nearly 10% compared to year ago levels off Covid fears and unattractive prices.
PALLADIUM / PLATINUM
Even though the June palladium contract spent most of the Tuesday US trade in positive territory, the trade remains largely unconcerned about a disruption of palladium supply flow from Russia. It should also be noted that General Motors Chief Financial Officer indicated the company has enough palladium supply to last through the end of this year! In an even worse sign of slack investment demand, platinum ETF holdings to date are down 4.8%! Unfortunately for the bear camp in platinum, the market has returned to long term support around $900 and it could be difficult to press platinum technically, but with ongoing evidence of global slowing and moderating inflation the bear camp continues to hold a fundamental edge.
COPPER
Fortunately for the bull camp the Chinese President Xi overnight suggested China will go “all-out” on infrastructure spending to support the economy as copper remains on the ropes in vulnerable to further selling off Chinese copper demand fears. In fact, with a 13,325-ton single day inflow to LME copper warehouse stocks overnight, supply news today has started out on a very bearish footing. However, like the palladium market, the copper market has now extracted most of its “war premium”, but one could argue that the net take-away from the war is a greater threat against demand than supply.
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