Strong Q3 Boosts Optimism In Precious Metal Assets
Gold, silver and platinum rallied for modest gains at the spot while palladium dropped for the second week in a row. The end of the quarter also saw gold equities outperforming the spot by a significant margin raising investor confidence in future opportunities to diversify with precious metals-based assets.
Modest gains highlight of Q3 for gold, silver; platinum slides
The modest gains in the US Dollar Index, which was up by 0.40 percent on Friday, momentarily muted the advance of the yellow metal spot price but overall, gold continued a strong surge that saw it sustain 4 consecutive months of growth. For the week, gold climbed another 0.27 percent to close above the $1,770 mark bringing its total September gain to 4.80 percent.
Silver also continued its strong growth alongside the yellow metal. For the week, silver rose by 1.95 percent bringing its total gain over the last 30 days to 12.24 percent. By mid-Thursday, silver was trading above $34 per ounce for the first time since March raising optimism in the market as investors look forward to a strong fourth quarter.
Rounding up our patrol of the precious metal markets are platinum and palladium which took opposite directions this week. The market for platinum had a strong rebound following last week’s dip, gaining 3.24 percent to close above $1,650; this despite prevailing concerns over the mining situation inSouth Africa. Meanwhile, palladium continued its descent losing another 0.31 percent for the week reversing some of the gains that it took on in late August. Optimism is tepid for both platinum and palladium heading into October as investors take a cautious approach until more sustainable labor agreements are hammered to ensure long-term mine production.
Silver ETFs make a strong comeback
The timid growth in the spot this week did little to halt the advance of most of the notable precious metals ETFs. Market Vectors Gold Miners ETF led (GDX) the way for the second straight week by posting a 1.38 percent gain. GDX mirrored last week’s performance by continuing to trade above $52 with more than 15 million units exchanging hands daily. Meanwhile, SPDR Gold Shares (GLD) and iShares Gold Trust (IAU) delivered more modest growth to close this week’s trading up 0.49 percent and 0.58 percent respectively.
Silver-based ETFs were more aggressive this week as both iShares Silver Trust (SLV) and ProShares Ultra Silver (AGQ) advanced by 1.67 percent and 3.15 percent respectively buoyed by the strength of the silver spot which has outperformed gold for 2 weeks now.
The main platinum and palladium ETFs also tracked the spot performance closely as ETFS Physical Platinum Shares (PPLT) gained 2.34 percent while ETFS Physical Palladium Shares (PALL) plummeted 1.09 percent. Heading into what is typically a strong quarter for precious metals; the medium-term volatility in both assets continues to highlight the market’s apprehension over platinum and palladium-based investments in lieu of the supply problems that are expected to be magnified by the high-demand months of October and November.
Trends downgraded to average strength
The volatile nature of precious metal futures was in full display this week as the trend strength for gold, silver, platinum, and palladium were all downgraded to average after 4 consecutive weeks of bullish forecasts. Palladium contracts at COMEX due to expire in December 2012 are already on the bubble as there’s a strong market perception to hold off until the spot shows significant signs of recovery. For the last 30 days, palladium has remained in the green with a 1.11 percent gain over that period although the more attractive options presented by gold and silver are pulling investors to these more viable forms of investments.
Gold equities post double-digit growth over the last 30 days
The strong growth in equities in recent months has reversed, for now. Notable gold companies Rangold Resources Limited (GOLD), Barrick Gold (ABX), Kinross Gold (KGC), and Goldcorp Inc (GG) all posted double-digit gains in the last 30-days outpacing gold’s 6.94 percent gain in the same period. KGC led the week with 2.72 percent growth bringing its 30-day total to 18.31 percent while GOLD and GG followed suit with 1.86 percent and 1.78 percent weekly gains respectively. For the last 30 days, GOLD and GG gained 25.60 percent and 15.55 percent. Rounding up gold equity notables is ABX which moved ahead 1.09 percent for this week and is now up 12.62 percent over the last 30 days.
For silver, Silver Wheaton’s SLW advanced by 3.57 percent to keep pace with the silver spot. Anglo-American Platinum Limited (AGPPY) also closed in the green with a 2.25 percent in-week gain while Anglo-American PLC (AUKKY) tailed the spot to close down 3.87 percent.