Gold Showing Resilience Despite Outflows - ETF Securities
Jun 19, 2015
Guest(s): Mike McGlone ETF Securities
Despite ETF outflows in gold, the metal continues to show resilience, says Mike McGlone, director of research for ETF securities. Live from our Wall Street studio, McGlone says gold is the only metal up in June on the back of reduced Fed tightening expectations following Wednesday's FOMC meeting and global economic concerns. Gold is up about 1% this month, he adds. The correlation between Fed funds futures and the gold price is near the highest ever, McGlone says. Silver has been the best performer in 2015, up 3% year-to-date, but is down 3% on the month, he says. While many analysts are saying that palladium has the best story fundamentally, McGlone is not biting. He explains that palladium is being pressured by China growth fears and profit taking in ETFs. Kitco News, June 19, 2015.
http://www.kitco.com/news/video/show/Ki ... Securities
Unlike Gold ETF's, silver ETF's have seen their strongest months since long. Value investors feel better days are ahead, the same way they did with WTI crude ETF's around new year. Mike McGlone is still wary of what the elevated gold/silver ratio wants to tell us: silver being above all an industrial metal, the high Au/Ag ratio may imply sluggish economic growth world wide.
Some more personal observations.
Growth fears may pressure palladium and platinum prices, yet that also hampers supply: most platinum/palladium producers are losing money, unless they hedged at past better prices. Nickel producers with a palladium by-product may still thrive as does the precious metal recovery. That's however a narrow base to build on: over 60% of the demand is to be covered by PGM producers with little or no credits for by-products. The current supply deficit may not shrink because of sluggish demand but stay level or rise because of mine production sliding or being disrupted.