Gold prices resumed their downtrend overnight, and were seen heading for a second straight monthly loss in the face of dollar strength and much-improved global equity markets. European bourse indices, for example, have now erased their 2009 losses. Cramer showed up on his show last night, armed with an assault rifle and then decimatedall eightspecies of bears still residing on his desk. Bulls are being born faster than pigs are being slaughtered at this time.
Fidelity Internationalpresident Tony Bolton said that all of the components required for a bull market in stocks are present and accounted for. That said, guru Dennis Gartman also showed up on Fast Money and gave a positive nod to buying things which, when dropped on one's foot, 'hurt like heck.' Not sure if Dennis included gold and silver, but he did not mask his enthusiasm for copper, to be sure.
The last day of April had gold starting off on the back foot this morning, showing a $10.00 loss per ounce at $888.80 after having touched lows near $896 overnight. Participants were evidently not factoring in a slightly lower dollar ($84.49 on the index) or the slightly higher oil price ($51.81 a barrel), and were instead seen focusing on squaring books and trying to gauge downside price risk in bullion. By some estimates, the yellow metal could be targeting the $810 area -should it fail to attract fresh legions of buyers if/when $860 is once again touched.
Silver fell 15 cents at the open, to trade at $12.65 per ounce. By all accounts, if the green shoots turn into robust branches, the white metal should do reasonably well in coming months. Does this imply some kind of 'to da silvery moon' orbital path? No. Sorry, no visions of $35 or $50 or $200 or parity with gold are on offer. Except you know where. CPM Group NY projects possibilities of $17 to $19 an ounce for the metal, provided investor interest remains as high and as visible as it has been. Remember, the market is in a near-record surplus condition.
Platinum rose $15 and repaired at least some of the recent heavy damage it sustained. This, despite evidence that today is the day when Chrysler files for bankruptcy and or is put out of its misery some other way. Following such a filing, fresh lipstick could be applied to the firm and that might render it pretty enough for an assimilation by Italian lover FIAT. Why FIAT would succeed where Daimler failed remains a mystery shrouded in an enigma. But, hey, at least it would be a total blast to have the Topolino (the FIAT 500,a.k.a. 'the Mouse') scurrying across American freeways chasing Mini(s). Okay, that's a bad attempt at a visual. Palladium stayed flat, opening at $218 per ounce.
Well, last year it was nothing but upside for the noble metals. Analysts tripped all over themselves to tell us how South African power supply problems were going to catapult the metal to Everestian heights. Problem is, we have had a complete cratering on the demand side for the metal. The principal culprit in the fast-unraveling bull equation for platinum and palladium continues to be North America. With Chrysler and GM set to go the way of the Dodo bird, jewelry buyersin Japan saying Iie kekkou desu the complex finds little comfort in stable demand from the automotive sectors of Japan and China - the only bright spots remaining. London-based GFMS chimes in:
With global vehicle production set to fall heavily, platinum and palladium demand for autocatalyst applications is set to see greater drops in 2009, according to GFMS' latest publication on the global platinum and palladium markets, Platinum and Palladium Survey 2009.
Peter Ryan, GFMS' Senior Consultant, commented that “while the scale of this remains uncertain, a 15% drop in vehicle production would not be surprising and a similar further contraction in overall PGM demand seems probable”.
In the report, the precious metals consultancy estimated that demand for platinum in autocatalyst applications fell sharply by 8% to around 3.8M ounces (120 tonnes), while demand for palladium contracted by 6% to just over 4.4M ounces (137 tonnes).
For platinum, the bulk of the loss was attributed to the slump in global vehicle production last year, combined with the continuing effects of thrifting and its substitution by palladium in both diesel and gasoline applications. The most pronounced drop that GFMS recorded was in North America, where demand for platinum plunged by a quarter.
A substantial decline was also recorded in Europe, the world's largest market for light duty diesel, with demand falling by 6% despite the increased fitment of diesel particulate filters in advance of Euro 5 emission standards. Elsewhere, these falls were partly offset by relative stability in Japan and modest gains in China and some other markets.
Turning to palladium, GFMS figures show that the decline was almost exclusively driven by North America, where the fall in its demand for palladium was broadly in line with the 19% drop in the region's light vehicle production. Although palladium continued its relative gains in gasoline and further penetrated the diesel sector in 2008, these were offset by the reduction in overall PGM loadings and the substantial decline in vehicle output.
Looking ahead to this year, global vehicle production is expected to fall heavily, particularly in the first half of the year, as the industry battles to clear unsold stock and reposition itself in the new environment. Consequently, demand for platinum and palladium in autocatalysts applications could see greater drops in 2009 than those of last year., GFMS noted.
Well, call us crazy (seventeen of you do) but we still like palladium. Why? It is an excellent substitute for expensive gold (to jewelers) and for expensive platinum (for car makers). Simple as that. And then, there is the chart here that kind of argues that a range of between $200 and $400 for the annual cumulative average (with the last ten years tallying a $348 average) is sustainable. Chalk up today's $220 price, factor in some downside risk, and even then the metal might deserve a small speculative nod. If the money is available.