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I am a terrible trader so take my thoughts for what they are worth.....
Gold looks primed to reach and eventually exceed the old record of $1911/oz. I don't think it's just going to soar up and thru the old record without any trauma. We are going to approach the old record and probably pull back at least once before exceeding the old record.
Short term, I expect some rally in the stock market as states start to reopen the economy. The market will ignore the long term implications and just rally on the hope that everything will be ok. This will cause fits and starts in gold. But longer term, reality will suck as people are still hesitant to go out to restaurants, movies or football games until there is an effective vaccine. So I expect the reality of a long, drawn out recovery will eventually sink in and gold will continue soaring due to the unlimited money printing that has been promised.
My longer term worry is the many promises of an effective vaccine. The CV-19 corona virus is a variant of the more common flu bug. After 30-40-50 years of trying, they still only promise us 40-60% effectiveness against the flu and some years they whiff because the bug has mutuated. So now we're going to have an effective vaccine developed from scratch in 18 months that will shield us old foggies and be able to be administered to billions of people in that timeframe????
It's the same kind of promise that the FED makes when it says it will do whatever it takes to fix things.......Except they don't fix anything. They just steal money from savers by lowering interest rates to zero and steal money from future generations by printing money so that future dollars will be worthless so existing debt instruments can be paid off with worthless dollars. Remember who owns the FED. Not us. It's the banks that own the FED. So that's who they are going to protect.
Oh, what did you ask? Sorry I must be off my meds. Yes, I agree that gold will likely pull back. I'm not sure it's going to happen that quick.
Gran Colombia Gold, GCM.to/TPRFF $4.18
Used to own this stock many years ago. Gave up on them because they had financing problems and had issued a bunch of debt. Their production is way up at around 200+K/yr and costs are fairly low at around $600/oz for the remaining operation. They just spun off their higher cost mine and kept 74% ownership so overall cash costs for the remaining Segovia mine should benefit them going forward. They will lose ~25K production but at $1100+ costs, they won't miss it.
Company appears to be in decent shape after some recent financings that included Eric Sprott. Good cash balances and free cash flow is a good sign. They did have a big writeoff in Q4 that reduced profits but their overall revs for 2019 were in the mid $1300's. If they don't have hedges, their total revs should improve by about $70 million at today's prices and eps should exceed $1/share. But that avg gold price received in 2019 seems too low so they probably do have some sort of hedges or they also refer to debt as gold notes so maybe there is something built into their debt that lowers their gold revs.
Spinning off the high cost mine should help 2020 in terms of the P&L. The production won't show increases in 2020 but the P&L should be much improved. They have decent reserves of over 2 million oz so have 10 years of remaining mine life. This is a decent junior with upside from the rising gold price and a low cost of production. The improved P&L may get delayed by CV-19 if it lowers production for the whole year but that's true for every miner. Sprott's involvement is a decent sign. He is spraying money all over the sector but Gran Colombia does appear to be a decent producer that will benefit even more if gold moves up further as I expect it to. The share count seems low so they probably did a reverse split at some point in the past several years. Guess this shows that sometimes companies can survive and get things turned around.
CEMI +.29 to $14.60 used to own this one. Missed the big runup. They were trying to compete in the HIV test market when I gave up and sold in the $3 range. They had a unique technology called dual path technology in their test kits that was supposed to be faster and more accurate but had a tough time penetrating the world markets.
This stock was 2.78 on March 13,2020. Big catalyst was emergency approval for their COV-19 test kit to detect antibodies in blood samples. Imagine how many of these tests will be done as the US tries to get back to work. Mass testing of a large proportion of the population is likely as we try to determine who has had the disease and may have antibodies to protect them from reinfection. It's been reported that a much larger number of people have actually been exposed and already have antibodies. But testing will be necessary to confirm this.
Chembio got FDA approval. The other two approvals so far are private companies.
Don't know the credentials of this author but this is a positive article on Chembio.
https://finance.yahoo.com/news/chembio-covid-19-test-could-121322419.html
I think the reason the market didn't respond more negatively is that this study is from China and had to be terminated because they couldn't enroll enough patients because it was at the end of the crisis in Wuhan. Will be interesting to see the results of the US studies.
junior golds
not really focusing on juniors yet. market is way underweight gold miners due to 10 yr bear market so big money hasn't come into miners in a big way yet. But I like Liberty Gold, LGGDTF. Big, high grade former mine in the US. Could be huge # ozs. I like Wallbridge, WLBMF due to high grade and big potential. Coming to mining decision this year. I like little royalty company, Ely Gold Royalties, partly because they have a royalty on Wallridge's Fenlon mine. I like Goro for the long run.
GFI +.86 to $8.14 new52wkhi, two days of +10%
Gold +$15.50 to 1753,
Gold first, then senior miners and 6+ months from now juniors will take off.
You can't print gold.
GDX breaking out today. New 52wkhi of $32.64
This is after the disastrous drop in price in March. GDX was down to $16.18 in mid March.
GDX has been underperforming gold or gld since the gold rally started last year. However today GDX has hit a new 52 wkhi of $32.60. Several technical analysts were pointing to a near term gold miner rally if GDX broke out so this could be the start of a "catchup" phase for big cap miners. We'll have to wait and see what GDX does at the close.
gfi +.58 to $7.22 +10%
Gold making big move today, +$47 to 1735 or +2.82%
You can't print Gold!
GDX +1.97 to $32.53 +6.4%
As I stated, big cap gold stocks are doing better than smallcaps. Normally I would prefer smaller stocks, especially one like GORO that has a new mine to boost earnings. In addition, I have followed the company for over a decade. MGMT has been consistent in terms of paying a dividend and not spending money on unnecessary drilling.
So if u are looking for a smallcaps to add to your portfolio, I like GORO but caution you that for the next 6-12 months, I expect big caps like GFI to do better.
I like SBSW a lot BUT production is split between gold, platinum, palladium and rhodium. Market doesn't quite know what to do with them. On some days, they treat them like a gold producer(they produce close to 1million oz/yr) but other days when platinum or palladium is down, they seem to forget the significant gold production.
In terms of PGM, SBSW is a giant. Biggest platinum producer in the world, 2nd in palladium and #1 in rhodium. IF/when auto production comes back, SBSW will be raking in the money. Before CV-19, there were actual shortages in palladium and rhodium, with little likelihood of increased production for several years. BUT demand destruction will definitely impact PGM pricing and availability. How much?? Don't know.
That unknown will affect market perception and enthusiasm for SBSW. Mine closures in South Africa could lower total industry production and help balance out demand destruction but we need more info. Market will "assume" much lower car sales until proven otherwise.
I like SBSW mgmt and geographic diversification but lately market hasn't agreed with me. Good luck.
Market is risk averse so big cap gold stocks have done the best. That means GDX has done relatively well vs small cap miners. Within the big caps, I like GFI. It's a South African miner with mines in Australia, South Africa and Peru. Produces over 2 million oz/yr.
I also like Goro. Small cap producer in Mexico and the US. Just built a gold mine in Nevada that will produce around 40K gold this year. Should boost inc and eps this year and allow them to increase dividend.
I have a small position in gold royalty company. Ely Gold Royalties. ELYGF. Gold royalties are the way to play the sector over time. Less volatile than miners and much more efficient. Small staff and production grows over time as they finance small miners and keep royalty interests in production. Biggest upside catalyst for Ely is a mine decision by Wallbridge Mining. Should become a 100K+ producer in the next year. Very high grade mine with upside in resources.
gold has outperformed stock market this year and over much longer periods, yet investment in gold and gold equities has fallen in the US. If US investors bought gold up to 1% of total investments, price would double. Gold is at all time highs in most every country except the US due to relative strength of US$. I think it will hit new all time highs in US$ in the next year and go well past $1900.
The politicians think they can print to infinity without consequences but they are wrong. Sooner or later, we'll need wheelbarrows just like the folks in Zimbabwe, Venezuela and Germany, long ago. I think they will switch to digital currency so they can drop the zeros more easily when they devalue. Also will allow them to track every single dime we spend so they can tax us more.
https://www.bloombergquint.com/business/bofa-raises-gold-target-to-3-000-as-fed-can-t-print-gold
Yes, Chairman Powell, it's true. You've got your bazookas and your helicopter but you can't Print Gold!
AND Japan is a nation of savers. Their citizens buy a great amount of the debt they create. US is a nation of spenders. Citizens do not buy much of the debt. So we are really printing. Japan is printing too but they buy their own counterfeit debt. As previously noted, Japan has not "Spent" it's way out of the last recession, much less this one.
OT The Bern will still pull the democratic party and the country to the left. He will have some conditions before he endorses Biden. The Demo platform will reflect some of his values. This emergency will reinforce the platform that big government must get bigger and solve every problem. I think that's bad for us in the long run but we'll see.
That payroll protection plan is crazy.
No collateral, no guaranties....
I can't imagine being back at the Bank and trying to figure out if I should make a loan or not. Govt says they'll make it good but this is going to be a total nightmare. They'll have to setup some kind of govt clearinghouse to decide if the bank and the company followed the rules because there are going to be so many business failures from this.
Centralized planning and trusting the govt to make the right decisions.......OMG
OT Viewed a couple of videos over the weekend on the effectiveness of masks. The best was an interview with the head guy in Korea. He said there is no doubt that masks help limit the spread, otherwise why would medical personnel wear them. Mentioned that US CDC head cautioned against the need for civilians to wear masks because there was a shortage for medical personnel.
BUT masks limit the spread, especially because a significant minority of patients have CV-19 and don't realize it. If the whole population is wearing masks, these non symptomatic victims can't spread it as easily if they are wearing masks. Likewise people at risk can't catch it as easily if wearing masks. In Asia, masks wearing is widespread and Korea appears to have gotten control. In Eastern Europe, there was a country that had citizens use primitive things like scarves to control the spread. The primitive masks also help prevent people from touching their face. limiting the transfer of the virus to their hands.
In the US, we poo poo the masks. A tiny minority are wearing masks. I think that's a mistake. I think the US is a prime candidate for the reappearance of the virus, even if it peaks soon.
Distancing helps but I think masks are the missing part of the puzzle for the US. We are not good at tracking down victims and their contacts and isolating them. We are way behind in providing protective equipment to medical personnel and masks for the general public. I don't think we need N95 masks for everyone. We just need almost universal mask wearing to limit transmission via air but more important limiting the transfer of the virus to hands and then to doorknobs, keypads,etc.
The irony is that the CDC said that we don't need masks because Americans raided existing supplies and are hoarding them. BUT they aren't using the damn masks they are hoarding!!! Simple behaviors can flatten the curve. Remember every picture from China, Korea, Hong Kong that showed people. They were all wearing masks. Compare that to pictures of the idiots at Spring Break. Not a mask in sight.
Gold is backtracking from historic one day gain yesterday. -$27 to $1608.
Longer term, helicopter money has to be good for gold. Massive deficits as far as the I can see and increasing at historic rates. What could go wrong???
So in this type of market, bigger is better. Production is better than explorcos. Will be that way for awhile until investors get greedy and opt for riskier bets on gold. That's when the explorcos will soar.
Today I'm holding a small position in GFI. Goldfields has the old traditional deep, high cost South African mines. GFI +.82 to $6.21 or +15%. GDX, representing the big boys of production is slightly positive.
God Bless those politicians. Arguing over controls so that we don't waste the helicopter money they are about to throw out the window! How fiscally responsible. Too bad they did such a crappy job for the last 100 years!
Gold, silver, platinum and palladium are all up big today. We'll see if these price levels hold. Even if they pass this two trillion dollar turkey, we still have to survive this mess and come out the other side. The sooner the better.
Miners are coming back but we need many more days like today to recover.
QE to infinity! FED promises to do whatever it takes.... Translated that means they will print, print, print and Hope it helps. Fiscal response seems more likely to help but the FED has thrown the kitchen sink at it. Interest rates at zero, promising trillions in liquidity.
Today the metals responded positively to the FED announcement.
Gold +5.54%, Silver +6.74%, Platinum +1.85%, Palladium +2.06%
After a massive selloff from $13 to below $4, SBSW is up 19.57% to 4.40
We'll see if gold and silver can regain more lost ground as the week goes on.
That french study recorded very positive results but the average age was relatively young. Not sure the at risk elderly are going to show such positive results.
No, he has continued to do so well that he started his own newsletter over 10 years ago. His name is Chen Lin and the newsletter is called " What is Chen Buying?. What is Chen Selling?"
He is on the speaking circuit at various investment conferences.
SBSW -1.98 to 4.06 diving like a rock on no news. But I did find this positive gem for the #1 platinum producer in the world.
https://thevault.exchange/?get_group_doc=245/1583834738-JointmediareleaseBASFlaunchesnewTri-metalcatalystdevelopedwithandsponsoredbySibanye-StillwaterandImplats.pdf
Naturally as the price has fallen, the dealers have experienced huge increases in volume so they have raised their premiums they charge over spot. Spot is dirt cheap but it's hard to buy actual silver at less than $18/oz for country issued silver coins!
There are some alternatives. You can buy silver rounds or bars minted by a private mint. They typically can't charge as much of a premium because the round may not be as recognizable or as easy to sell when the time comes. I don't know if they do it anymore but there are a couple of sites that have starter kits of silver rounds that they sell to you at spot. Obviously they want your name so they can send you ads or call you but it's a cheap way to get a few oz of silver. You can google " buying silver at spot" and probably find out if they are still doing it.
With the increased demand, there are lots of dealers that are out of stock. I would not order unless they have the inventory in stock. Last time silver orders increased, some dealers went out of business very suddenly. I like Apmex, JM Bullion, Provident Metals.com. They've been thru the wars and survived.
I always like junk silver, which are US silver coins that used to be in circulation(pre 1965) but the premiums have soared.
When I'm trying to buy silver, I typically google something like "cheapest silver coins" and follow the leads. Hopefully you will find some reasonably priced silver. If you have any more questions, let me know. I have spent a lot of time searching so I'm pretty familiar with the pros and cons of various sites.
https://www.jmbullion.com/starter-pack/ Looks like these guys are still doing it.
https://sdbullion.com/silver-at-spot-price
Headed out for some trout fishing so will be gone till late this evening but will get back to you tomorrow if you have questions.
The last article I read about testing treatments in China said that they are having trouble enrolling enough patients in the trials because there are not enough new cases!!!
The one caveat about this particular treatment is that it has to be administered early to have a positive effect. That means the US needs to get it's act together on testing. We still don't have adequate test kits. That was one of the problems at the Kirkland nursing home facility. Even after it was known as the center of the US outbreak, all the staff and patients hadn't been tested for several weeks!
US hubris. The rest of the world used a test kit that CDC didn't like so they developed their own. didn't work. Had to re design and still not out in quantity.
latest news on treatments...
https://www.chinadaily.com.cn/a/202002/04/WS5e38c275a3101282172749ad.html
I thought they were already testing but it looks like it could be late April before they have first results.
Certainly the speed and capacity to respond has improved over time but the best defense is still human behavior. My sister has lupus and has done fine despite a gloomy prognosis decades ago. She has been practicing the avoidance of germs and viruses AND healthy eating for 40+ years since her diagnosis.
She was the first person I knew that went to the restroom and used a towel to open the door and then discarded the towel. She was the first person to tell me about singing Happy Birthday twice while washing. She never took drugs to control the lupus once she recovered from the initial illness.
Let's hope this CV-19 scare does a couple of positive things.
1. Convince non believers to get their flu shots annually to reduce the spread of the flu and the death toll, which is many times the CV-19 toll so far.
2. Make sick people aware of the behavior that spreads colds and flu. Cough into your arm and avoid people when you're sick.
3. Get the Chinese to STOP these markets for live animals that are generating pandemic diseases every 10 or 20 years! Duh!
Having Verizon competing against AT&T with Siyata products should spur the sales folk to push harder and close sales. First Responders is a big market but changing over is going to be expensive so having both Verizon and AT&T should add credibility to Siyata products.
OT This is a good interview with a WHO doc who has just come back from China.
Hi yielddude,
We met in Vegas in 2006? But we haven't met again.
Bobwins
Big Platinum News +$38.40 to $904.10
Platinum has been the laggard in precious metals for several years. The VW Diesel debacle has slowed diesel sales worldwide and that has lessened demand for platinum in catalytic converters. Conversely Palladium and Rhodium are used in gasoline catalytic converters and are in actual deficit supply situations, leading to tremendous increases in prices.
Last week Anglo American Platinum announced a temporary shutdown of their Anglo Converter Plant. They had an explosion that shutdown their primary converter A 2/10/20. They had a backup unit and were in the process of ramping it up when they found water in the furnace unit, which could cause explosions. So they had to shut down the B unit. They expect Unit A to be repaired by second qtr 2021 and Unit B to be back in operation in 80 days.
As a result of the total closure of this part of the process, they expect total platinum production to drop by ~900K ounces in 2020.
THIS IS HUGE! Total world platinum production in 2018 was ~8 million ounces. Over 10% of supply has just vanished until 2021. I expect platinum prices to finally participate in the PGM rally. In addition, this will also give manufacturers more time to transition from palladium to platinum in designing catalytic converters. Palladium is still more than 2 times more expensive than platinum at $2400 vs 904 per ounce.
The shortage in platinum will not be huge, a few hundred thousand ounces for 2020 but the example of a major producer going offline may cause users to try to stockpile platinum, which could lead to a bigger short term price jump than fundamentals would justify.
Who's going to benefit? Sibanye Stillwater, SBSW, is a good candidate. #1 platinum producer in the world. #2 palladium producer #1 rhodium producer. They win any which way it goes in the PGM world.
Here are the links:
https://www.angloamericanplatinum.com/media/press-releases/2020/06-03-2020
https://www.statista.com/statistics/418212/global-platinum-supply/
https://www.prnewswire.com/news-releases/wpic-platinum-quarterly-2019-global-platinum-market-balanced-with-surplus-forecast-in-2020-300961909.html
Keep an eye out for the report from China on the results of the Remdesivir trials. First reports due out in April. Remdesivir appears to have a decent chance of helping. Gilead has developed remdesivir, although it's not approved for anything yet. GILD has done well in the recent markets, with shares moving up 5% today.
TLT has also done well due to the rush to the bond markets.
https://www.marketwatch.com/story/these-nine-companies-are-working-on-coronavirus-treatments-or-vaccines-heres-where-things-stand-2020-03-06?siteid=yhoof2&yptr=yahoo
This is a bit late but one hedge against the volatility is TLT. What is the one thing we can almost guarantee, FED will lower rates if things look bad. They are the one central bank that has room to do it.
Actually TLT has been a slightly better hedge than gold. I'm sticking with gold but TLT has done a nice job and market is expecting another .25 in March.
On a CV-19 note, the deaths in Seattle are almost all from the nursing home. 9 deaths so far and about a 30% death rate vs verified cases because most of the cases are from the one nursing home. They have had to quarantine dozens of the local city ambulance crews because they have been taking the nursing home folks by ambulance to the hospital without hazmat suits before the confirmed CV 19 diagnosis. I expect there will be dozens of deaths from this one facility with 180 residents and 80 employees. One news story said 50 of the staff have some symptoms.
https://komonews.com/news/coronavirus/feds-to-investigate-kirklands-life-care-center-as-death-toll-rises
On another side note, I expect a big market pop if the current tests that started in mid February come out positive for the anti virals that were intended for other diseases but might help with CV-19. The first victim in Washington recovered and he was given remdesivir early in the process. This is a failed ebola treatment. The victim was young so he probably would have recovered anyway but even if it helped avoid some fatalities in the older, weakened victims, it might reduce death toll significantly. They are also testing an AIDS combo drug.
I live in Seattle and was out yesterday to a doctor's appt. As I was sitting in the waiting room, I noticed how many elderly(like me!) were in the room. Then I thought about the medical assistants and nurses in the office. If/When the panic hits, Can you imagine the danger of getting the virus for the medical staff? They didn't have face masks on, which I've read are not that effective but soon we may see routine working folks wearing hazmat suits.
Then I went to Target to pick up something. It wasn't that busy but I did notice two young Asian guys with face masks on. They were loading up on water and probably getting prepared for the worst. Then I thought about the retail clerks. They are sitting ducks for the virus.
I have plenty of canned goods and I don't venture out of my house that much anyway, except to babysit my grandkids. They are always catching colds from their little playmates. Are they going to shut down all the schools? How can they stop runny nose kids from spreading the virus like wildfire? AND giving it to their elderly grandpa@!
I was planning on going to Las Vegas next week for the PAC 12 basketball tournament. We'll see how the situation changes by then.
This may blow over and be no worse than the flu but it does seem a little more dangerous. Keep your families safe!
OT
Today's interest rate cuts symbolize our situation. Having created giant asset bubbles all thru the economy, the FED is desperate to reinflate the bubbles, regardless of the consequences.
Cutting interest rates is NOT going to solve a damn thing against the coronavirus outbreak. Will it make more test kits available? Will it cause people to venture out of their houses more? Will it make them eager to buy cars? NOT! The coronavirus is creating a demand slump of HUGE porportions that hasn't hit the US in full force yet.
Remember those pictures of Wuhan streets EMPTY! This is a city of 11 million people! Do you think they care if interest rates are 1/2 % lower???
The FED is catering to Wall Street again. When the bubble pops, the damage to the economy AND individuals will be bad. Much worse than if they had just let 2008 reset the economy. Delaying the inevitable is just going to make it worse and allow bad players to survive when they should go out of business.
We are here to make money in stocks so interest rate cuts are good but this move and all the previous moves to create asset bubbles will hurt the US economy in the long run. No guts, no glory!
The FED and politicians have NO GUTS! We are printing money till it don't work no more. Move over Venezuela!
no gave up on SGI.v. It's still cheap but will need to prove they can reliably produce 80K + smoothly introduce the open pits to get to around 100K. Could get lumpy and market won't reward them for that until there's a reliable pattern of achievement. Always liked the big resource and the availability of second mill to expand operations but will pass for now.
Had CDE last year. Market was banking on Silvertip to provide some uplift to production, especially since the company was guiding for HUGE production of lead and zinc from Silvertip into Q4, even though they hadn't come close all year. I think the market will keep penalizing CDE. Terrible mgmt effort should not be rewarded.
Now they have to admit their error by closing down the mine due to low prices but also because they couldn't even produce 1/2 their guidance at Silvertip.
Gold and finally silver appear to be headed up some more. Money printing by all the world's central banks is not going to stop until we have a full fledged financial disaster. They know the consequences but are not willing to let their economies go thru the normal ups and downs of the economic cycle. In the end, they will try to blame something else but they have only themselves to blame.
So, based on that rant, you know I'm very bullish on gold and silver, which bodes well for miners. The mining stocks have not runup this time with gold and silver. Market is still in love with general equities because the FED will intervene anytime there's any problems......until liquidity doesn't solve the problem. So there's plenty of room on the upside. I'm sticking with bigger miners because that's what will move first after gold and silver prices surge and most are already profitable from the previous moves in metals prices. Some appear stretched on valuation BUT the leverage should begin to show up in the P&L's soon. If they're producing a million oz of gold and gold goes up $100/oz, that's $100 million bucks that going to show up as increased revs AND net profit minus taxes. Costs shouldn't change much as prices rise so the producing miners should get full benefit from rising prices.
Naturally the longer this goes on, the more mgmt can grant themselves pay raises and bonuses to erode profits but mining has gone thru an ugly bear market for years so I think mgmts will be a little slower this time around in granting themselves too many gifts.
The other bugaboo is greedy miners that think they have to buy smaller miners to bulk themselves up and overpay. Again, because they have been punished by the market for so long, I don't think M&A will heat up as fast this time. Of course CDE bought Silvertip fairly recently so just try to see if mgmt has done a good job of managing thru the lean times and hope they don't get cocky or stupid.
I think the chances of making money in the miners is very good. The FED is going to keep lowering rates and that should be good for the metals.
Good luck, I was out trout fishing Wednesday. The weather was glorious!
Fishing was ok but hoping for more good weather so I can go again.
GOLD hitting 7 year highs at $1623. Looks like gold rally from 5/19 is resuming uptrend. Very positive for any miners producing gold.
to be fair, the economic background for energy stocks has been bleak. GSPE is speculative and has certainly fallen from more optimistic days but even solid producers are getting whacked hard by the forecasts of surplus supply and slack demand worldwide.
IF GSPE drills and IF they hit the big one, it's an undervalued sleeper that could make us a lot of money but there are a lot of IFS and I'm sure many are tired of waiting with no news from the company for months.
SBGL +.77 to 12.77 SBGL riding another big day in PGM and precious metals pricing. Palladium is the rocket booster, soaring as much as $250/oz in early trading overseas but now a +$114/oz increase to $2612/oz. Platinum also up $11 to 1005. Gold slightly positive at +5.50 to 1609.
I would prefer slow and steady but palladium must be a case of an actual shortage AND a test of the fractional trading system used in metals futures trading. Gold and silver trade many times actual physical availability of the metals because most traders never expect to deliver the metal. Tin hatters always talk about the squeeze if the sellers ever had to deliver physical bullion.
In the case of palladium, we are seeing what happens when there is an actual shortage and sellers are having to pay up to deliver the metal they promised when they sold contracts. The sellers are having to pay more and more to deliver the actual metal.
The scary part is that eventually this merry go round is going to stop. Eventually the contract sellers will either close out all their contracts and swear off short selling OR the exchange may be forced to declare some kind of rule change or suspension of palladium trading. The China coronavirus situation plays into this because China has become the largest car market in the world. The main use for both palladium and platinum is in auto catalystic converters for emission reductions. If China's virus problems turns into an economic disaster, the demand for car exhaust catalysts is going to take a big hit and palladium demand will diminish. How far it falls depends on the severity of the economic contraction and the length of said contraction.
SBGL has reasonable costs on their pgm operations so could easily afford to have prices fall from current levels and stay in business but they just reached profitability in Q4 so you can't say they are flush and could handle any situation. But they were producing when platinum was $800 and palladium was $500 or less.
IF gold continues it's bullish run, that might provide a nice cushion for SBGL and their PGM operations. The gold operations is recovering from the multiyear strike and will reach full production by year end 2020. Full production is slighty above 1million oz/year.