Metal Meltdown: Palladium Plunges, Copper Crashes Into Bear Market
While traders are keeping a close eye on developed markets to see if the risk from from Turkey’s financial crisis or China’s trade war is spreading, the emerging-market contagion has slammed the base metal markets. Hard.
Base metal markets plunged on Wednesday, with most contracts falling more than 2% in London: the broader base metals spot price index was down over 4%, and is now just shy of a bear market.
The components were all ugly: Copper sank 2.3% to 5,903 a metric, the lowest since July 2017 and is set to enter a bear market. Aluminum slumped 2.1% to $2,027 a tone, while palladium plunged 5% and the FTSE 350 Mining Index sank to a four-month low, while Zinc plunged 3.1% and was trading at a two year low of 2,377/ton. Not even gold, the usual safe haven, was spared from the selloff, sliding as low at 1,180, and was down 0.9%.
Putting today's plunge in context, today alone, the six LME base metals have in aggregate dropped more than 25%, and are headed for the biggest collective loss since 2011.
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Commodities have been hammered by growing fear that problems in China and Turkey will lead to weaker global economic growth, and eventually hurt demand for raw materials. Losses on Wednesday were triggered by a broad retreat in China as the yuan weakened and recent data showed the economy hit a rough patch. Earlier this week Beijing reported an across the board miss for all key economic categories: industrial output, fixed-asset investment and retail sales.
Amid the slowdown, copper has once again emerged as the true barometer of China's economy, with its price tracking the slide in the offshore yuan almost tick for tick.
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And (this headline is in error. it's the lowest ratio of silver to gold, not lowest price see below)
Silver Slammed To Lowest Since April 2009
As the dollar surges, precious metals are under notable pressure, but silver is dramatically underperforming gold as its industrial-usage weighs it down to its lowest price since April 2009...
Gold is back at its lowest since Dec 2016 in USDollars...
And has broken down out of its recent tight range in Yuan...
But silver is getting monkeyhammered in USDollars...
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As noted in a December '16 post:
...gold was last down $10.90 an ounce at $1,131.80. March Comex silver was last down $0.289 at $15.80 an ounce....Gold $1184.80 down $15.90
...Throwing numbers around, the December 2015 low in silver was $13.90-something so we have a couple bucks to go before that multi-year support.
On gold we still think the the 1980 highs-Hong Kong $875; New York $850-are achievable. An equivalent 23% decline in silver gets you down to the low $12's.
That Polish Olympian who sold his silver medal last August said he did it to save a kid with eye cancer but I'm starting to think he was using some black-box market timing.
Silver $14.45 down 60 cents
Yesterday, our caution on the short side was early:
Gold, Silver Looking At Two-Year Lows
