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<\/p>\nThe front month contracts of gold and silver are up from last week 3.46% and 7.73%, respectively.\u00a0\u00a0 This has resulted in the ratio of the 1-month Gold contract to the 1-month Silver contract (Figure 1) falling since last week, but essentially unchanged since Aug 6, 2020.\u00a0\u00a0 With the front month gold and silver contracts closing yesterday at $1999.4 and $28.05, respectively, the gold\/silver ratio is now 71.28, or 9.2% higher than the 15-year average.\u00a0 \u00a0December Gold (Figure 2) closed yesterday at $2013.1, up 3.43% from the close on Aug 11, but essentially unchanged since Aug 4, 2020.\u00a0 December silver (Figure 3) closed at $28.24, up 7.6% since last week, but almost unchanged from its close on Aug 7, 2020.<\/p>\n
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From an open interest perspective, gold\u2019s open interest continues to fall, as it is down 1% for the last week and down 10.7% since recent open interest high on July 27.\u00a0 \u00a0Silver total open interest is down 5% for the last week and down a similar amount from the peak in open interest on Aug 6, 2020.\u00a0 Both gold and silver saw a decrease in the CFTC COT net funds positions between the 8\/4 and 8\/11 reports, which continues the trend in net positions since the July 21, 2020. \u00a0\u00a0It should be noted that gold non-commercial net fund positions are well above their 5-year average where silver is below.<\/p>\n
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Now for Palladium.\u00a0 Palladium remains range bound between $2130 and $2365 and will likely remain there unless we see definite proof that automotive production in countries other than China are increasing or rhodium is in short supply (see below).<\/p>\n
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The final thoughts I leave with you today are regarding the price of palladium.\u00a0 Russia\u2019s Nornickel, the world\u2019s largest high-grade nickel and palladium producer released their latest earnings and business outlook on Aug 11.\u00a0 For those who are interested you can find the report here<\/span><\/span><\/a>.\u00a0 Nornickel has a neutral outlook on palladium as they expect to see a balance year with respect to supply and demand.\u00a0 This is a shift in expectations as until recently demand was expected to exceed supply.\u00a0\u00a0 However, the price of rhodium has increased 34% since August 5, 2020.\u00a0 As rhodium often is a good indicator of future trends in palladium, this increase should be monitored (Figure 6).\u00a0\u00a0\u00a0 If there is a shortage of rhodium, auto makers are forced to increase their palladium loadings substantially, per the Nornickel report and this could drive up the price of palladium as happened in 2019 and 2020.<\/p>\n If you would like access to the great insights and analysis provided by the Fundamental Analytics platform, sign up for a 15-day free trial<\/strong> <\/a> and demonstration!<\/strong><\/a><\/p>\n![\"\"](\"https:\/\/www.fundamentalanalytics.com\/wp-content\/uploads\/2020\/08\/Metals-Aug-19-Titled-Figure-6.png\")
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