Precious Metals

Precious metal prices fluctuate in face of virus

Metals prices are fluctuating and have been for weeks as the COVID-19 pandemic rattles markets. After a steep drop, prices swung up, signaling an unprecedented period of volatility.

Other markets fell beginning in February in response to the COVID-19 pandemic, and metal prices eventually followed, when large-scale selloffs to increase liquidity flooded the market with metals. After a mid- to late February rise in values, silver, gold, platinum, and palladium all decreased sharply in value as February ended, according to charts on Kitco.

Industrial metals like copper saw precipitous decreases as well (copper went from almost $2.60 per pound to just over $2.00 per pound in the last four weeks). Copper, nickel, zinc, lead, and aluminum have all seen significant price drops.

Silver bottomed out March 19 at about $12 per ounce, gold around $1,475, platinum around $600, and palladium at $1,557. Palladium saw the steepest decrease, falling from an opening price near $2,800 per ounce on Feb. 27 to close around $1,550 March 16.

Precious metal production may decrease across the world as mines and refineries close in response to the COVID-19 pandemic. South African platinum and palladium mines stopped production on March 24 as the country enacted a shutdown. South Africa accounts for 75 percent of the world’s platinum and 38 percent of its palladium. . Switzerland closed three gold refineries that together refined 43 percent of the global annual mine supply. Depressed production may affect metals prices in the weeks and months ahead.

Potential and ongoing lockdowns and quarantining procedures may impact the availability and prices of precious metals, particularly if more mining, refining, or transport staff are deemed nonessential or borders are closed. Lockdowns of stores and refineries may also depress precious metal buying. This could in turn impact metal prices.

Despite many unknowns, beginning around March 20 precious metal prices began trending upwards. The climb is attributed by some analysts both to investors taking advantage of the low prices to buy and  to public panic buying in the face of the pandemic. The U.S. Mint reported all silver coin sales totaling 4.83 million ounces of silver in March so far, four times the monthly average in 2019. The Mint has also sold 230,500 ounces of gold American Eagles in the same time frame, a large increase over its 2019 monthly average of 12,583 ounces.

Much of the precious metal buying has been in North American and Asian markets

At time of writing, silver is trading around $14.50 per ounce, with gold around $1,650, platinum around $740, and palladium near $2,200.

On March 26, an article by Neils Christensen published at Kitco said “long-term bullish sentiment has returned to the marketplace… investors have become bullish on gold as central banks and governments flood the market with liquidity.”

Some analysts point to the Federal Reserve’s open-ended quantitative easing program as a source of the short-term metal price recovery. The stimulus package approved by the Senate may have an impact as well.

Some large financial firms project increases in gold prices over the course of the year; A Goldman Sachs statement on March 24 indicated a belief that gold would be at $1,800 in a year.

It is unclear how durable the current price recovery will be.

“We’ve never seen this before,” said Fred Holabird, CEO of Holabird Americana. He described the precious metal market’s performance as “not predictable.”

According to Holabird, numismatic value will not be significantly affected by the crisis. Coins that trade largely on their intrinsic value (common-date $20 gold eagles in low Uncirculated grades, for example) are at the mercy of the metals market, but people intent on buying numismatic rarities will likely continue buying the coins they want, if the prices are right.

To that end, some major auctions will still take place. Heritage Auctions plans to have its scheduled auction at its headquarters in Dallas April 22 through 24 and online, instead of at the canceled Central States Numismatic Society Convention, taking proper precautions, according to the Heritage  website. Stack’s Bowers moved its auction, which was scheduled to take place in Baltimore at the Whitman Expo, to a facility near their offices in California, with the majority of bidding attributed to online bidders.

In addition to the Whitman Expo, Central States Numismatic Society Convention, canceled shows include numerous local shows. Other organizations have postponed their auctions and events. Many club meetings around the country are also canceled and may remain suspended for some time as the crisis progresses.

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