#Gold & #Silver #COT Commitment of Traders

Net commitments of futures traders (attachment 1) shows that large speculators (hedge funds and money managers) have increased their long gold positions. Net commercial gold dealers have increased their short positions.

 

The KITCO Gold Survey reveals that Wall Street and Retail Investors (Main Street) are bullish for this week (attachment 2).

 

The Gold Barometer shows the same pictureas last week. Gold stocks are halfway between neutral and overbought and the physical gold price is neutral (attachment 3).

 

The gold hourly chart indicates that gold had a good run last Monday and then glided down till Friday, March 31st and just gained a few dollar at the end of the trading session. As per Friday, New York time 4 p.m., gold closed at US$ 1,247 per ounce, unchanged on the week (attachment 4).

 

HUI, the ARCA Gold Bugs Index, went nowhere last week. It is still trading below the 50-day moving average and was unable to really penetrate on the upside the 200-day moving average since November 2016 (attachment 5). HUI is an index of shares of gold companies.

 

Commitment of futures traders in silver reveals that large speculators have increased their long positions and net commercial silver dealers their short positions. Historically these positions are extremely large.

 

In the first quarter of 2017 silver (+13.4%) has outperformed gold (+8.6%).

 

Over the last 6 months the gold price didn't perform well against currencies of emerging markets (see attachment 7-9). It lost 7.3% versus the Brazilian Reals, 7.5% versus the Mexican Pesos and 1.6% versus the Chinese Yuan.

 

What #gold price are large cap gold stocks reflecting?

As can be seen from the Table below, Randgold Resources is trading at a 30% premium, which implies a gold price per ounce of US$ 1'635. On average the large capitalized group is trading at a premium of 5% or an implied gold price of US$ 1'321 per ounce.

 

This from SCOTIABANK:

 

- Gold Equities Continue to Lag the Underlying?…What Gold Price the Large Cap Gold Equities Reflecting?: Scotiabank Senior Precious Metals Analyst Tanya Jakusconek this morning noting that with the gold price continuing to march upwards post Fed (and post Trump's healthcare failure), she thought she would highlight the valuation level in the group and her stock recommendations. As per the chart below, the group is currently trading at an overall premium to gold price of just 5%!

 

Premium/Discount to Gold Price – %

Source: Scotiabank GBM Precious Metals Research

 

Recall that the "Implied Gold Price" resulting the calculated premium/discount (in the chart above and table below) is the gold price that would be need for the respective stocks to be trading at 1.0x NAV3% using Tanya's modeled estimates.

 

Source: Scotiabank GBM Precious Metals Research

 

#Palladium- The Star of the Metals Markets $PALL

The star of the week was Palladium. The grey-white metal touched the highest price since March 2015 (attachment 1).  The weekly chart shows the medium term base palladium has formed (attachment 2). The Point&Figure chart reveals the breakout of the chart formation (attachment 3).

 

The 10-year palladium chart shows that the metals is just US$ 100 below the peak of 2014 and therefore has outperformed, gold , silver and platinum (attachment 4). The palladium price is now trading around the highs of 2015, which could be a resistance point.

 

A Reuters article (March 16) stated that a fund created by Norilsk Nickel had purchsed palladium from Russia's central bank reserves to help meet demand from its customers. The central bank holds reserves of palladium, which Norilsk will use to fill orders and not for stockpiling.

 

The Russian central bank has been selling palladium

for years into the market (from stockpile) but lately it seemed that selling had diminshed. It all looks Russia has found a way to better control the palladium market and therefore the palladium price.

 

Also the big fairy tale by politicians and car dealers

that diesel engines are less polluting has come to

an end. German Chancellor Angela Merkel said once

if you buy a diesel car then you buy a car which is more environmental friendly. She said this during an

electoral campaign. Diesel engines in relation to gasoline engines are more efficient, they need less fuel and therefore emit les CO2. However, they emit a lot of nitrogen oxides, which the World Health Organization (WHO) classifies as harmful. In addition nitrogen oxides decompose in a chemical process into fine particulates which could harm the lungs.

 

Platinum is used to reduce emissions in diesel-powered engines whereas palladium is used in gasoline-powered engines. A strong Chinese market tends to favor palladium, which are used by catalytic converters in gasoline-powered cars, which make up the biggest market share in China and the U.S. Attachment 5 shows the applications for palladium and attachment 6 the palladium producers by country.

 

In an article of TD Securities  (Toronto-Dominon Bank) last December, TD looks for the palladium market supply deficit to double from 600,000 ounces in 2016 to 1.2 Mio. ounces in 2017.

 

The palladium market is very small with only just over 6 Mio. ounces produced per year (attachment 7).

 

The best vehicle to trade palladium is the ETF Physical Palladium Shares (PALL) US$ 77.49 (attachment 8). The palladium price is very volatile, which doesn't suit all investors.