Gold Is Buoyant despite Falling Equity Markets
(Continued from Prior Part)
Platinum and
palladium performance
Platinum and palladium’s second quarter performance has been adverse, especially because of the July rout. So far, platinum fell ~16% and palladium fell ~25% this year. However, the five-day trailing performance resulted in a profit for platinum and palladium. They rose ~3.80% and ~10%, respectively. palladium prices have been more adversely affected than platinum. There’s a tendency for the former to underperform the latter when investors become risk-averse.
As of August 31, the platinum and palladium prices settled at $1,010.50 and $602.25 per ounce. palladium rose close to 16% from the August 26 low of $519.20.
Platinum and palladium are both primarily used in catalytic converters, but platinum remains heavily exposed to the European market. palladium outperformed other precious metals and rose 11% in 2014. However, it failed to keep pace with the sector’s gains in January. It eased nearly 2% as gold hit five-month highs and platinum looked set for its best month in almost a year.
ETF investors—net sellers
So far, ETF investors have remained net sellers of palladium and platinum this year. ETF investors liquidated 111,463 ounces of palladium in the first six months of the year after buying around 893,000 ounces last year. Speculators have lowered their net-long position by 878,000 ounces YTD (year-to-date) to the lowest level since February 2014.
Other precious metals ETFs that have underperformed this year include the SPDR S&P Metals and Mining ETF (XME), the Global X Silver Miners ETF (SIL), and the Sprott Gold Miners ETF (SGDM). They fell 36%, 26%, and 25% during the past year.
Mining companies that saw a downfall in returns during the past year include Yamana Gold (AUY), Silver Wheaton (SLW), New Gold (NGD), and Newmont Mining (NEM). They account for ~16.50% of the to Market Vectors Gold Miners ETF (GDX)
Margin is sliced for silver and
palladium
The CME (Commodity Metal Exchange) is a division of NYMEX. It has lowered the initial margin requirement for silver and palladium futures. The margin requirement for silver fell to $6,600 per contract from $7,700. The margin requirement for palladium fell to $3,960 per contract from $4,400.
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