The Weekly Dig - Sept 8, 2017

by Mick Carew, PhD,, Emma Boggio, MSC, CPA and CA, and The Haywood Mining Team

The Weekly Dig - Base Metals Fall Amid Concerns Over Chinese Speculative Buying


It has been a spectacular 4 months for base metals, particularly copper, which has risen almost 20% since early May. Nickel and zinc also experienced impressive gains over the period, with both metals rising almost 30% since June. Much of the gains in copper have coincided with less than expected copper output from some of the world’s largest copper companies due to a combination of industrial strike action, declining grades and power outages. This upward momentum stalled this week as each of the major base metals finished lower, with copper (down 1.98), nickel (down 3.89%), zinc (down 5.17%) and lead (down 6.02%) each finishing at US$3.03, US$5.23, US$1.37 and US$1.01 per pound respectively. A significant drop in new orders for U.S.-made goods, the biggest in nearly three years, likely sparked concerns over longer-term growth in the world’s largest economy while the U.S. dollar has weakened. Investor concern over Chinese speculation on copper has been increasing. This speculation has been fueled by better-than-expected macroeconomic data, threats by the government to ban scrap metal imports, and an increased focus on reducing air pollution caused by industrial metals smelting. On the precious metal front, gold had another strong week as it finished 1.60% higher at US$1,347 on Friday. Silver followed suit as it recorded a 1.39% increase over the week to finish at US$17.98. Meanwhile, platinum rose only 0.07% to US$1,008 and palladium finished down (4.97%) at US$936 for the week. The S&P/TSX Global Gold Index finished slightly down, finishing at 208.62, and the Global Base Metals Index fell to 116.00. Finally, WTI crude prices rose earlier in the week before falling to finish only 0.57% up at US$48 per barrel.

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