Metals Prices – Polishing the Crystal Ball

We formulated our revised estimates for year-end prices for 2018-20 in early December and had cause to compare how our previous estimates for 2017 had performed. These were surprisingly close to the mark with a few exceptions such as Platinum and Uranium, the big two disappointments of the year.

However the last three weeks of the year (usually typified by low volumes and unreal prices) provided fertile ground for speculators to window-dress their favorite metals’ closing prices for the year. The precious metals in particular rose strongly on little more than Bitcoin having a one-day stumble. A gold rally must be built of sterner stuff than that. We suspect the stronger risers of recent weeks shall give back their gains early in the New Year. It’s somewhat ironic that when gold and silver longs manipulate the price up it goes without notice but when shorts or other perceived conspiratorial forces “make it” go lower then the gold bugs and silver nuts see red.

While virtually everything, except Uranium, made gains in the last month of the year, the big base metals were more muted in their rise which raised the suspicion that they were harder to move, pricewise, by the market’s “fixers”. Some of the less transited metals like Tin, Cobalt (the year’s superstar), Moly and Tungsten did little in December. Therefore the revival in interest in Vanadium would also seem to be real because it bucks that trend.

Below can be seen our estimates (created with our Hallgarten hat on) for last year the closing prices and the divergence between our estimate and what actually happened. We also have our estimates out for the next three years which will bring little joy to gold bugs and dampen the ardour of silver’s fans.

Outlook_estimates

We have added Vanadium to our suite of metals with estimates although we have followed it since 2010. As we couldn’t get anyone enthused (until this year) it seemed futile to talk about Vanadium (though the same could be said for Moly, Antimony or Tin). We feel that 2018 will be the year of the specialty metals and that Vanadium is the metal to watch from this universe.

As for base metals we are in a very good place for almost all of them, which is a very infrequent moment for commodity strategists. Lead is a dog and shall remain that way, particularly as the realization grows that the switch to EVs and HEVs removes all incremental demand and much of the recycling demand for this metal. Zinc’s shortage will worsen bringing two more years of rising prices before any amelioration from new(ish) projects appears. Nickel is a metal on which we remain a lot less bullish than the flock. We suspect majors will be able to ramp up production from their mega-mines, most of which have never operated at capacity due to woeful prices for much of the last decade.

In short things look good in 2018 for just about everything in the metals spaces, except gold.

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