** Quarterly Overview**

Q3 Overview 2022 – Q4 Outlook 2022 PDF

Q3-2022 Quarterly Commodity Spreadsheet

Precious Metals

Precious Metals Weekly Component Report PDF-11.30.2022

Precious Metals Weekly Component Report Spreadsheet-11.30.2022

Comments:

Palladium fell 1.17% since November 23, while rhodium moved 0.76% to the upside. Platinum rose 4.26% to lead the sector and silver moved 1.19% higher. Gold edged 0.03% lower since the previous report. Precious metals were steady, with the only significant move in the platinum futures market which remains above the $1,000 per ounce level.  

Gold and silver mining shares had slightly underperformed the gold and silver futures since November 23 after outperforming last week. However, the mining stocks rallied in the aftermath of Chairman Powell’s November 30 speech.

Trends:

The short-term gold and silver trends remain marginally higher. Platinum’s short-term bullish trend remains intact. Meanwhile, palladium futures continue to be in a bearish trend. The action in the mining shares was a correction from the previous week when they outperformed the metals. Open interest in gold, silver, and palladium moved lower as the futures contracts rolled from December to the next active months. The metric in platinum moved higher, which is a technical validation of the bullish price action in the platinum futures market. The precious metals sector will be highly sensitive to interest rates and the US dollar over the coming days and weeks.

As I pointed out last week:

“The World Gold Council reported that central banks purchased a record 400 tons of gold in Q3, which is a bullish sign for the gold market, and other precious metals, by extension.”

Precious metals prices were higher after the Fed Chairman’s comments on Wednesday in the aftermarket as the market now expects a 50-point hike at the December meeting.

Recommendations:

  • We are long the SILJ ETF product that holds junior silver miners. I rate SILJ a hold at the $10.80 level.
  • I recommend holding 5% to 10% of portfolios in gold.
  • I remain mostly bullish from a long-term perspective but have been on the sidelines over the past weeks. This week, I am prepared to buy gold and silver mining shares and the platinum ETF, leaving plenty of room to add on price weakness.
  • We bought the GDX ETF at the $25.37 level or lower on October 6. At $29.06 per share on November 30, I rate GDX a hold.
  • We bought the SIL ETF at the $25.83 level or lower on October 6. At $28.68 per share on November 30, I rate SIL a hold.
  • We bought the PPLT ETF at the $85.10 level or lower on October 6. At $95.83 per share on November 30, I rate PPLT a hold.

A Final Note

As we head into the final month of 2022, the OPEC and Fed meetings will determine the path of least resistance of markets across all asset classes. Meanwhile, demonstrations in China could set the stage for an economic comeback in the world’s second-leading economy if the government eases the COVID-19 protocols. In a year where the leading stock market indices have posted significant losses, end-of-the-year tax loss selling could impact markets over the coming weeks.

Commodity prices have come down from the 2022 highs, but the potential for future rallies is high. The geopolitical landscape remains tense as the war in Ukraine continues to threaten peace in Europe and causes the divide between the US/NATO and Russia to widen. China could hold the key to the global economy over the coming weeks if the government does not react harshly to the current demonstrations. Meanwhile, the dust has yet to settle in the crypto arena as the saga of the FTX bankruptcy continues to grip the asset class.

I expect another volatile year in the commodities asset class in 2023. I am a buyer of dips in December and will maintain core long positions into 2023.

Thank you for your continued support!

Warm regards,

Andy Hecht

 

 

Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal.  This document does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.