EDITOR'S NOTE: Don’t Miss a Beat! Kitco News is launching a weekly Newsletter highlighting  our most popular features, articles and videos! Sign Up by clicking on the Kitco Newsletter Box.

Metals Making Comeback Lately - optionsXpress

Monday July 7, 2014 10:50 AM

There has been a stronger tone in a number of base and precious metals lately, says Mike Zarembski, senior commodities analyst with optionsXpress. “Don’t look now but one of the least loved commodity sectors by trader and analysts to start 2014— precious metals – (is) starting to display rather bullish price moves,” he says. Palladium has led the charge on tight supplies and improving auto sales, he says. “However, some of the biggest surprises are in the performance of gold and silver of late,” he says. “Here, analysts note that gold ETF (exchange-traded-fund) purchases have increased and now stand at their highest levels since mid- April, as buyers are starting to turn once again towards gold as a diversification from equities and bonds due to rising global tensions especially in the Middle East, as well as, a potential hedge against rising inflation. Even the base-metals sector is starting to show some support, especially aluminum, zinc and copper. Traders view a potential Chinese economic rebound, which is being spurred by data showing manufacturing expanding at its fastest pace so far this year, along with continued improvement in U.S employment, which may encourage expansion in the industrial sector and in turn help support demand for industrial metals.”

By Allen Sykora of Kitco News; asykora@kitco.com

 

Comex Silver May Be Forming Longer-Term Bottom – optionsXpress

Monday July 7, 2014 10:50 AM

Comex silver appears to be establishing a longer-term bottom, at least based on the technical-chart picture, says optionsXpress. September silver remains not far from the early-July high of $21.335 that was its most muscular level since March. “Looking at the weekly continuation chart for September Silver, we notice what appears to be a longer-term bottom forming as prices have found strong support just above the $18 price level,” the firm says. “In addition, we note that prices are now above the downtrend line drawn from the major 2011 highs when prices failed at a test of the $50 price level.  The market is trading above the 20-week moving average, but remains well below the 200-week MA, which is currently at $28.30. The 14-week RSI (Relative Strength Index) has turned positive, with a current reading of 57.24.”  The firm lists $22.18 as the next resistance level, with support found at $18.62.

By Allen Sykora of Kitco News; asykora@kitco.com

 

Citi: Should Gold-Mining Companies Consider Benefits Of Limited Hedging?

Monday July 7, 2014 9:00 AM

Citi Research suggests that gold-mining companies might re-evaluate whether they could benefit from hedging a small portion of their production, even though shareholders are likely to object. There was massive hedging in the 1990s, which Citi notes became a public-relations battle for mining companies when they later undertook hedge buybacks when gold prices soared. However, Citi says, “should the industry really have zero hedging when it is dealing with a commodity that went from $100/oz to $850/oz between 1976 and 1979 and then collapsed to below $300/oz by 1982? A commodity which went from $750/oz in 2008 to $1,850/oz in 2011 and back to $1,180/oz in 2013?” Citi notes that the airline industry undertakes some hedging over fuel costs to avoid the type of volatility seen in the gold industry. “Why is it then that so many gold investors insist on a zero-hedge policy?” Citi describes Polyus as “brave” for recently undertaking a price-protection strategy. “We are not sure whether hedging 10% or 30% of production is the correct amount. What we are sure about is that the industry should have an open debate on this so that we can put behind us the PR-shock of the big buybacks 12 years ago, start with a clean ‘philosophy’ sheet, and figure out what is the best route to deliver the highest returns to shareholders.”

By Allen Sykora of Kitco News; asykora@kitco.com

 

Report: ‘Modest’ Net Hedging By Gold Producers Occurs In First Quarter

Monday July 7, 2014 9:00 AM

A “modest” amount of net hedging by gold producers occurred in the first quarter, according to a global hedge book put out by Thomson Reuters and Societe Generale on Friday while U.S. markets were closed for a holiday. The report cites a delta-adjusted addition of 278,000 ounces, or nine metric tons, quarter-on-quarter, the first increase in the hedge book since a fractional gain in the third quarter of 2012. As of the end of March, the global hedge book stood at 2.8 million ounces, or 87 tons. Several producers added hedge cover in the first quarter, although on balance, hedges were over short tenors and relatively modest in scale, the report says. While this was the first quarter of net hedging in more than a year, it was small compared to the announcement of recent fresh hedging by Polyus Gold on July 3, says William Tankard, manager of precious metals mining at GFMS research and forecasts at Thomson Reuters.  “Activity confirmed to date will see to it that 2014 gold hedging activity remains squarely on the supply-side of the market,” he says. Last week’s Polyus announcement “certainly represents the most significant gold producer hedging activity since the wave of de-hedging in 2008 and 2009, when AngloGold Ashanti and Barrick Gold eliminated their hedge books.”

By Allen Sykora of Kitco News; asykora@kitco.com

 

INTL FCStone Sees Platinum Pushing Higher During July

Monday July 7, 2014 8:08 AM

Platinum is likely to strengthen in July due to the combination of  good demand and ongoing supply issues despite the end of a lengthy strike against three major South African producers, says INTL FCStone. The metal dipped in June as the strike ended but the decline was short-lived as investors concluded output may not return to normal before September. Meanwhile, South African mining companies are curtailing investment plans and prices have been helped by reports of possible labor action at utility Eskom.  “In the meantime, demand for platinum remains strong against a backdrop of rising auto sales, with even platinum’s largest market – Europe – showing signs of life,” INTL FCStone says. “June car sales in 13 of 17 western European countries are running at an annualized rate of 11.93 million, this according LMC Automotive, a 3.3% increase over the 11.54 million registrations seen in 2013 and stand in stark contrast to the monthly sales declines we were seeing last year. Chinese and U.S. sales are also strong….Over the course of July, we see platinum pushing higher, with a $1,460-$1,540 trading range expected.” The firm sees sister metal palladium in an $830-910 range in July.

By Allen Sykora of Kitco News; asykora@kitco.com

 

INTL FCStone Sees Gold Giving Back Some June Gains During July

Monday July 7, 2014 8:06 AM

INTL FCStone suspects that some of the June gains in gold will be pared in July. The firm notes that although gold gained $90 last month, about half of the advance came on one day, June 19, on what appeared to be massive short covering and/or technical run higher. Gold’s inability to generate follow-through “should be of concern to the bulls,” especially since fund net length in Commodity Futures Trading Commission data rose to its highest level since March. “We suspect the dollar will likely move higher over the course of July, generating further downward pressure on gold,” INTL FCStone says. “Secondly, we do not see the Ukrainian or Iraqi situations morphing into something more destabilizing in July and suspect that both conflicts are settling into regional grinds that will be tolerated -- if not forgotten -- by the markets.” The firm also cites data from Precious Metals Insights saying that that Chinese gold imports could fall by up to 400 metric tons this year amid tightening controls on commodity financing and weaker domestic demand. “Over the course of July, we see gold trading between $1,270-$1,345 as some of June’s gains are rolled back,” INTL FCStone says. However, silver may hold up better than gold this month “as it may draw on the strong tone we are seeing in base metals, where improving macro variables and shrinking supply are giving prices a boost. Over the course of July, we see silver trading between $20.35-$21.80.”

By Allen Sykora of Kitco News; asykora@kitco.com

 

 

Precious Metal Charts

Click to see this Precious Metal chart
  1. 24h
  2. 30D
  3. 60D
  4. 6M
  5. 1Y
 

Interactive Chart