Last week has been a much better week for the precious metals and the hope is that this trend will continue. US economic figures came out slightly better than expected, and progress seems to have been made in the quest for a solution in the ongoing European Sovereign Debt crisis. The European Financial Stability Facility (EFSF) has finally been ratified by all 17 members of the Eurozone but this is still the one with the 440 billion Euros cap. The market was and still is looking for a potential two Trillion EFSF umbrella. I find it very difficult to believe that this amount of money would find any political support from the major participants inside the Eurozone. Another point of contention is still the discussion about the size of the haircut for the Private Sector in a Greece debt restructuring. A 50 or even 60 per cent write-off would put huge pressures on the banking sector for re-capitalisation. France is favouring this money to come directly from the EFSF whilst Germany still insists that the various Governments first help their own banks and only a balance to be funded through the EFSF. The figures coming out of China show that a slowdown is visible and that could disturb the economic outlook for the rest of the year. So, there is still enough reason to be careful out there.
Gold: 1681.00 – up $43 on the week. Gold does still command a premium of US$130 compared with Platinum. The market has calmed down considerably and the 100-day moving average at US$1655 held all week. We closed towards the high of the week and the outlook looks still very positive. The official sector is continuing their asset diversification programmes and our estimated number of 350 tones net buying from the official sector might actually be too low. We estimated 350 tons in May, and we have seen more buying and from different Central
Banks since. We therefore expect the net buying from the official sector to reach potentially 600 tons. Gold seems also to have changed some of its correlations, which were in place for the last year. Gold is now moving higher with higher stock prices and a recovering Euro, and has therefore rediscovered its inverse relationship with the US $.
Option volatilities midrates: Gold atm
1 month 27.25 % down 3.75 %
3 month 28.50 % down 2.50 %
6 month 29.50 % down 1.25 %
1 year 30.00 % down 0.50 %
EFP (Exchange for physical) midrate: Gold spot to December Comex : US$ 1.41
ETF: Holdings nearly unchanged at 2322 tons overall
Support: 1659 and 1600 Resistance: 1705 and 1738
Silver: 32.15 – up US$1.00 on the week. Another week, another dollar so to speak. The trading ranges for Silver starting to be more of their usual self now, and the Option
volatilities documenting this as well. These volas are still very high but the huge gyrations have given way to more orderly trading. A lot of Silver investors have liquidated their positions and shut up shop. These huge swings have not been helpful as too many investors lost money with their Silver positions. It feels as if Silver will struggle to find the impetus and the investors’ fantasy to look beyond US$ 40 for the rest of the year. The Silver market would see an acceleration of investment above US$ 40 but this might not be forthcoming in the meantime.
Option volatilities midrates: Silver atm (at the money)
1 month 52.00 % down 14.00 %
3 month 50.00 % down 8.00 %
6 month 49.00 % down 5.00 %
1 year 46.50 % down 3.00 %
EFP: (Exchange for physical) midrate: Silver spot to December Comex: Flat 0.00 US cent
ETF: The total holdings are now 14985 tonnes
Support: 31.30 and 30.04 Resistance: 33.50 and 34.25
OUTLOOK: Mildly bullish
Platinum: 1550 – up US$62 on the week. Platinum did well to recover from the panic
selling seen the week before. The discount to Gold has narrowed to approx. US$130 but
Platinum is not out of the woods yet. US$1550 is the first decent resistance level which
clears the way for US$1570, but it shows that even seemingly insignificant better than
expected economic news has some significant impact on the ratio to Gold.
Option volatilities midrates : Platinum atm (at the money)
1 month 34.00 % up 6.00 %
3 month 32.00 % up 4.00 %
6 month 31.50 % up 3.50 %
1 year 30.00 % up 2.00 %
ETF: Holdings are unchanged at 46.8 tons.
EFP: (Exchange for physical) midrate: Platinum spot to January NYMEX: $ 2.75
Support: 1510 and 1482 Resistance: 1570 and 1590
Palladium: 622 – up US$ 35 for the week. Palladium has done well considering the uncertainties in the Automotive industry. The Chinese car sale figures have helped and
overall Palladium has fared significantly better than expected. We closed exactly at the first major resistance level of 622 but we still keep our neutral outlook until Palladium can
clear 638 convincingly.
Option volatilities midrates: Palladium atm (at the money)
1 month 40.00 % up 5.50 %
3 month 37.50 % up 3.50 %
6 month 36.00 % up 2.25 %
1 year 35.00 % up 1.50 %
ETF: Holdings are unchanged at 59 tons.
EFP: (Exchange for physical) midrate: Palladium spot to December NYMEX : $ 0.60
Support: 580 and 565 Resistance: 622 and 638