Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Global equity markets rallied in the past week due to a continued decline in new cases of COVID-19 in most of the hardest nations, vaccine rollout, and expectations of Biden’s next stimulus package. All seven indices we track reported gains (orange bars).

Current Vs Pre COVID-19 ( as of Feb 9, 2021 )

Source: FRC / Various

Silver prices dropped 4% after a 13.5% gain in the prior week. As detailed in our report last week, the price run-up was instigated by retail traders on Reddit. As silver has relatively fewer short positions (compared to GameStop/NYSE: GME and AMC Entertainment/NYSE: AMC), we were not expecting the Reddit army to trade silver for too long. Base metals moved up due to the above-mentioned factors relating to equity indices.

Week-over-Week (Feb 08, 2021) and Year-over-Year (Feb 08, 2021)

Source: FRC / Various

 Inventory levels of copper and zinc declined on the LME, and increased on the SHFE (Shanghai), providing us mixed signals.   

LME Inventory ( Feb 08, 2021)

Source: FRC/Various

SHFE Inventory ( Feb 05 , 2021)

Source: FRC/SHFE

Valuations of gold and base metals producers were up 2% and 3%, respectively, in the past week.

Gold Producers Feb 8, 2021

Source: S&P Capital IQ & FRC

Base Metal Producers Feb 8, 2021

Source: S&P Capital IQ & FRC

Base Metal Producers Feb 1, 2021

Source: S&P Capital IQ & FRC

Except Spain, almost all of the hardest hit nations continue to experience a decline in daily new cases of COVID.

Daily New Cases in the US, India, UK, Spain

Daily New Cases in Mexico and Canada

Source: https://www.worldometers.info/coronavirus/

9.4% of the U.S. population has received vaccinations vs 7.6% at the same time last week. This compares to 17.7% in the U.K. (up from 13.7%). Israel and the UAE are at over 40%. The U.S. is currently administering over 1.2M doses per day, unchanged from the prior week. We estimate that 25% of the population will be vaccinated by June 2021, and 50% by October 2021.

Share of people who received at least one dose of COVID-19 vaccine, Feb 8, 2021

Source:Official data collated by Our World in Data – Last updated February 1, 2021

We continue to expect an economic recovery in H2-2021. Recent economic data from the U.S. and China (shown below) are suggesting that both economies are in recovery-mode.

U.S. Unemployment , U.S. Manufacturing Index , China GDP Growth and China Manufacturing Index

Source: TRADINGECONOMICS.COM | National Bureau of Statistics of China

We are raising our silver price forecast from US$20 to US$22.5/oz based on our outlook for economic conditions. We are not making any changes to our other price forecasts:


Source: FRC


Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research