SWOT Analysis: Why Bullion Looks Cheap Compared to U.S. Equities

Strengths
The best-performing precious metal this week was platinum, up 1.20 percent for the week after surging 3.48 percent on Friday when the December 16 issue of Science published research on a new fuel cell design using an atomically ordered platinum and lead core surrounded by a thick uniform shell of four platinum layers. The new design can undergo 50,000 voltage cycles with a negligible decay in performance and no apparent changes in their structure or elemental composition which has been a weakness in previous fuel cell designs. China’s gold withdrawals surged in November, according to the monthly report from the Shanghai Gold Exchange. The increase of 214.72 tonnes was a 40 percent rise over the October figure. This level of demand puts China on track to potentially maintain its position as the world’s largest gold consumer. Kitco also reports that China may be unofficially restricting gold imports. Rumors and reports indicate that international banks are having difficulties with their imports, as the People’s Bank of China is taking longer to approve each importing transactions. The central bank may be trying to unofficially restrict gold imports to curb high capital outflows from China’s investors. Bloomberg reports that gold imports by India climbed 10 percent in November, to the highest this year. After pressure on gold demand due to higher prices, an excise tax and anti-corruption measures, overseas purchases rose to 111 metric tons , compared to 101 tons a year earlier. Zerohedge also reports the rush to buy gold in the midst of the disruption has consumers paying as much as a 50 percent premium above official India prices. India’s top gold importer, Axis Bank, has reportedly suspended the bank accounts of some bullion dealers and jewelers after some executives were arrested over money laundering. Weaknesses
The worst performing precious metal this week was palladium, down 4.73 percent. Palladium, which is up 23.75 percent this year, seemed to trade more in line with the sentiment towards gold and silver but did not see the Friday bounce the other metals experienced. Gold mining company Gold Reserve, Inc. is still owed $300 million for its first installment from Venezuela for the seizure of a mining project. The payment was due on November 30, pushed back from the original date of October 31, but the country requested an extension to December 15. Now that deadline has passed also.

This post was published at GoldSeek on 20 December 2016.