Written Commentary
GOLD / SILVER
While the gold and silver markets are trading higher the bull camp is probably disappointed with the lack of significant gains in the wake of what amounts to an invasion of the Ukraine. However, some analysts have suggested that the Fed’s posture on higher interest rates will be a more important development than the Ukraine over the coming month. It should be noted that March silver overnight took out a 10-month-old downtrend channel resistance line and appears to be building a consolidation around $24.00 from which higher prices are likely to unfold.
PALLADIUM / PLATINUM
Surprisingly, the palladium market was unable to sustain a multiweek upside breakout overnight considering the potential for an embargo of Russian PGM exports. Perhaps, the trade sees sanctions implementation focusing on more important food and energy commodities and does not see a near term threat to supply yet. Like the palladium market the platinum market has not responded to the potential for a disruption of PGM supply from the Russians. However, that potential remains in place, and it should be noted that Russian producers formed a “fund” several years ago to store supply in the case of emergencies to meet demands of their customers which could mean the supply is already outside of Russia or it could mean that more of the world supply is unavailable to the world market than is expected by the trade.
COPPER
Obviously, the copper market has registered concern for “demand destruction” because of the incursion of the Ukraine. In other words, the markets are not concerned about a disruption of copper supply flow from Russia and the copper market instead is likely to “track” global equity prices. Retroactively, it should be noted that Shanghai copper warehouse stocks have recently exploded, with stocks more than doubling in just 2 weeks. Therefore, the Chinese have some source of cushion in the event Russian copper exports are disrupted, On the other hand, China is unlikely to abide by Western sanctions of Russia.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
