Author: Sid Rajeev, Head Of Research

Weekly Mining Commentary

Strong jobs data from the U.S. drove up the US$, treasury yields, and global equity indices last week.

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

Source: FRC / Various 

The stronger US$ negatively impacted prices of all the mainstream metals.

Week-over-Week (Aug 9, 2021) and Year-over-Year(Aug 9, 2021)

Source: FRC / Various

Inventory levels remain volatile both on the LME and the SHFE (Shanghai).

LME Inventory (Aug 9, 2021)

Source: FRC/Various

SHFE Inventory (Aug 6, 2021)

Source: FRC/SHFE 

Valuations of gold producers were down 4%; base metal producers were down 3%.

Gold Producers

Source: S&P Capital IQ & FRC

Base Metal Producers

Source: S&P Capital IQ & FRC

Gold Producers and Base Metal Producers

Source: S&P Capital IQ & FRC

Six (five last week) out of the 15 hardest hit nations (including the U.S., Turkey, Italy, Iran, Germany, and Mexico) experienced higher daily new COVID-19 cases last week. Four (five last week) experienced WoW increases in deaths. We note that deaths to daily new cases are approximately 0.5% in highly vaccinated countries, down from the 1.5%-2.0% highs earlier this year.

Globally, 30.0% have received at least one dose vs 28.6% at the same time last week. 72.0% of Canadians have received at lease one dose (previously 71.8%). 61.8% of Canadians are fully vaccinated (previously 59.5%) vs 58.1% in the U.K. (56.7%), and 49.8% in the U.S. (49.3%).

Share of people vaccinated against COVID-19

Source: Our World in Data

As mentioned last week, vaccine hesitancy is high (20%-30%) in developed economies, and remains the number one bottleneck for a full economic recovery. This week, the U.S. is expected to release inflation (CPI and PPI) data. Higher than expected inflation will be positive for both gold and silver. As shown in the chart below, inflation is already at a 10-year high. Although the Fed is likely to start tapering bond purchases in October, an interest rate hike this year is highly unlikely.

Consumer Price Index

Source: U.S. Bureu of Labor Statistics

We are maintaining our price forecasts.

FRC Forecasts

Source: FRC

The following companies reported earnings. We will be publishing updates shortly.

Source: FRC

Author: Sid Rajeev, Head Of Research