thanks Heinz, yes Miyazawa is going for it -g-
AM Precious Metals Comment - March 8, 2001
Dave Rinehimer, New York
EUROPEAN PRICES (03/08) HIGH LOW LAST
GOLD 264.15 261.80 262.90/3.40
PLATINUM 601.00 587.50 598.00/608.00
SILVER 4.46 4.43 4.45/4.47
FUTURES (03/07) HIGH LOW SETTLE CHANGE VOLUME
GOLD APR 262.70 260.10 262.40 + 1.50 35,000
SILVER MAY 449.00 442.50 446.50 + 2.00 6,000
PLATINUM APR 591.00 583.00 591.00 + 9.40 1,145
PALLADIUM JUN 800.00 773.00 796.65 +24.50 89
GOLD/SILVER RATIO 58.55 - 0.02 (DEC SETTLEMENTS)
PLATINUM - GOLD 328.60 + 7.90 (APR SETTLEMENTS)
COMEX STOCKS (03/07)
GOLD 1,632,873 OUNCES UNCH
SILVER 97,972,748 OUNCES - 636,336
NYMEX STOCKS
PLATINUM (03/06) 29,750 OUNCES UNCH
PALLADIUM (03/06) 16,800 OUNCES UNCH
COMMENT: One month lease rates for gold at 4.71% are again approaching
levels of last week's spike of 4.75% which is leading to firmer prices
overnight. Pgm's also higher as platinum one month lease rates have risen to
10.3% from 9.0% last month. Yesterday, the ability of the April gold futures
to hold above the $260 level after marginally dropping below Tuesday's
$260.20 low triggered a steady improvement in futures prices as the market
settled in positive territory. The early focus was on the further decline in
the Australian dollar, which heightened the potential of producer selling
from Australia. There was limited reaction to a spike in one-month gold
lease rates to 4.28% from 2.2% since it may have reflected increased borrow
demand from producers for forward sales rather than reduced lending from
central banks. There was little market reaction to news that the size of the
Bank of England's ever other month gold auctions will be reduced to 20
tonnes from 25 tonnes for the 2001-2002 financial year that begins with the
May auction. In total the BOE plans to sell 120 tonnes of gold as part of
its schedule of reducing gold reserves to 300 tonnes from 715 tonnes. The
BOE final gold auction for the 2000-2001 financial year for 25 tonnes will
be next Wednesday.
An easing in lease rates sent gold futures from near the $270 level back to
the low $260 area. Late last week one month lease rates eased further to
1.7%. Earlier in the week the rate had reached 4.75% but about a month ago
one month lease rates were 0.5%. One-month rates are currently at 2.2%.
Reportedly, higher lease rates and near-term supply tightness may reflect a
large number of one-time gold loans taken out two years ago coming due and
not being rolled forward. To return gold to central banks, bullion bank
lenders must buy back physical gold and return it to a central bank, thereby
tightening the spot supply. Also, some central banks may have taken gold
back gold from the leasing market because rates were considered too low.
Regardless, for now the focus for the gold market is lease rates and the
potential for speculative short covering. The potential exists for sizable
short covering by speculators. As reported by the CFTC on Friday, the non-
commercial net short position for COMEX gold declined to 50,795 lots as of
February 27 from 66,731 lots a week ago. Last week it was announced that
India cut the customs duty on gold to 250 rupees per 10 grams from 400
rupees to discourage smuggling. This action could increase official imports
of gold over the longer term. There is still uncertainty over the demand
outlook for gold in India following the January earthquake. The nearby gold
futures should hold above its 1999 (20-year low) at $252.50, but a sustained
recovery is not anticipated until demand prospects improve and/or central
bank supply declines noticeably.
Silver continues to oscillate below the $4.50 level showing limited
carryover reaction to the recent rally in copper prices. The nearby silver
futures is expected to maintain a $4.25 to $4.80 ranges. Consultants CPM
Group estimated a 2001 silver supply deficit of almost 98 million ounces
compared with a world supply deficit of 117.5 million in 2000. Government
disposals of silver, including sales by the U.S., China and India were
estimated at 53 million ounces for this year. In other news, silver output
in Mexico, the world's largest producer registered almost a 14% year-on-year
increase in 2000. Last week the March futures held above it contract and 3-=
year low for the nearby futures. Assuming a soft landing for the global
economy, we view downside potential for the silver market, as limited
assuming Indian demand does not collapse. However, for now, technical
objectives should be closely monitored. Another supply deficit situation and
reduced Chinese sales should stabilize prices. A recovery above the $5.00
level is not expected, as higher prices could trigger selling by China |
