Gold breaks through $1,715/oz on record ETF holdings

MiFID II exempt information – see disclaimer belowBlueRock Diamonds* (BRD LN) – Extension to lockdown in South Africa till end AprilBluejay Mining* (JAY LN) – MoU with trader for 200ktpa of ilmeniteChaarat Gold* (CGH LN) – FY19 financial resultsHochschild Mining (HOC LN) – Temporary suspension of the final dividendOrosur Mining* (OMI LN) – Q3 resultsPhoenix Copper* (PXC LN) – Reports a 32% reduction in losses for 2019Rambler Metals* (RMM LN) – Covid19 mitigation measuresSerabi Gold* (SRB LN) –– March delivers highest monthly gold production since operations began

SP Angel rank 2nd in APEX Precious Metals forecasting in Q1 2020

• Rankings are as follows: 1^st UBS, 2^nd SP Angel, 3^rd ED&F Man, 4^th INTL FC Stone, 5^th Capital Economics

Chinese steel mills seen restocking driving iron ore, vanadium, coking coal and related prices

China GDP growth set to slow to 2.5% from 5.4% in 2020 (Reuters poll)

• China Q1 GDP forecast to fall by 6.5% yoy.
• We wonder if this may be a chance for China’s statisticians to reset the way they collate their statistics.

Copper – risk on as copper moves with recovering manufacturing confidence

• Supply disruption from mine closures looks increasingly likely to offset the expected fall in copper demand by the year end.
• We expect demand to fall by around 1mt this year but can easily see the disruption of mine closures in Latin America and elsewhere to cut production by more than this. WTO reckon global trade could fall by 13-32% slowing global GDP to just 1.5% according to the OECD..
• Copper mine supply could be cut by around 1.2mt this year if every mine is closed for around three weeks.
• While some mines may reopen others will remain closed for longer and most will suffer some form of disruption due to the Coronavirus and other logistical, supply chain issues. 
• MMG’s Las Bambas copper mine declared force majeure last week as Peru extended its lockdown till 26 April highlighting the disruption caused by the Coronavirus
• Increased bank lending in March in China as part of the government stimulus is seen as helping companies with working capital and liquidity

China – auto market recovering as state eases lockdown restrictions

• China auto sales fell 79% yoy in February but are seen recovering as demand rebounds in China as the state eases restrictions and dealerships reopen (Reuters)
• Long term trends for growth in China are reported to be unaffected (National Development and Reform Commission)
• The NDRC also see the sector as unaffected by the global supply chain
• Further new emissions standards may be postponed in some provinces according to the Ministry of Ecology and Environment
• European car plants prepare for factory restarts according to VW and Mercedes

Diamond sector frozen amid India’s lockdown

• Migrant labourers vital to the diamond industry fled from urban areas to their rural hometowns as a result of the lockdown imposed by prime minister Modi last month. 
• Around 90% of all diamond cutting and polishing is done in India, however the lack of stones to cut has meant around 200,000 diamond workers have departed to towns and villages in Gujarat, further halting activity in the Industry.
• Until India reopens and once again receives rough diamonds to cut, there is no demand for the stones- highlighting the supply chain’s fragmented nature and reliance on India.
• Prices for rough diamonds dropped 15-20% last month and are likely to fall further when the biggest miners such as De Beers inevitably cut prices (FT). 

Stimulus funding pledged

US – debating another $250bn help to businesses (not agreed with the Congress yet)

EU Finance Ministers failed to agree on a strategy to mitigate the economic impact of the pandemic. Further talks scheduled for Thursday

• $2tn US fiscal package approved by Congress. US may add $0.6t state aid for mortgage markets and travel industries
• $2tn US – Trump looking at $2tn infrastructure fund
• $700bn – US + Fed rate cut to 0-0.25% last night. The $700bn QE to buy Treasuries and mortgage-backed securities.
• $963bn (€750bn) ECB scraps limits on sovereign bond purchases. ECB PEPP buying running at around €250bn
• $825bn (€756bn) Germany – Bundestag approved €156bn in extra borrowing and ~€600bn in emergency funds
• $344bn – China stimulus + $127.2bn. China stimulus was $586bn in 2009
• $996bn (108.2tn yen) was. $544bn (¥60tn) – Japan
• $400bn (£330bn) UK + $242bn (£200bn) UK QE from BoE & no business rates plus £25,000 cash grants for hospitality sector
• $387bn (€304bn) France, $200bn (€200bn) Spain, $214bn (A$320bn) Australia, $78bn (C$107bn) Canada, $32bn Saudi Arabia, US$43.7bn Singapore, $22.6bn India, $19.3bn HK, $13.7bn South Korea, $10bn Switzerland, $8.4bn Italy, $7bn NZ, $3.5bn Ireland, $2bn Taiwan, $0.75bn Indonesia,
• Argentina to default on $10bn of dollar debt issued til the end of the year. Does no affect the $70bn that Argentina is currently in talks to restructure.
• $1,000bn – IMF available + $12bn World Bank,
• >11.9tn Total

Fatalities year-to-date:

• 119,789 – Coronavirus
• 139,035 – Seasonal flu
• 280,400 – Malaria
• 396,547 – Suicides
• 385,889 – Road accidents
• 443,418 – HIV/AIDS
• 714,979 – Alcohol
• 1,429,058 – Smoking
• 2,347,807 – Cancer
• 3,711,054 – Communicable diseases

Dow Jones Industrials		-1.39%	at	23,391
Nikkei 225		+3.13%	at	19,639
HK Hang Seng		+0.75%	at	24,484
Shanghai Composite		+1.44%	at	2,823

Economics

US – US equities are up more than 25% off lows recorded in late March implying the return of the bull market amid extensive stimulus measures, China reopening and a drop in new cases in Europe.

• The Fed rolled out a $2.3tn monetary stimulus package on Thursday last week to provide liquidity to small businesses and municipalities as well as expanding measures introduced last month to back corporate debt markets.
• Extraordinary measures are being led by quickly deteriorating economic data.
• Weekly jobless applications totalled 6.6m last week taking the total over the previous two weeks to 13.5m, an unprecedented level, as more states joined lockdown and self-isolation measures.
• Treasury Secretary Steven Mnuchin said airlines that ask for government aid will need to repay 30% of the assistance within five years and will have to issue warrants to the state equal to 10 % of those loans.
• The Treasury said it has contacted nearly all airlines by now regarding conditions of the financial assistance.
• Bernie Sanders dropped out of the presidential race last week and endorsed Joe Biden earlier n Monday.

China – Trade data came in better than expected with both exports and imports posting lower than forecast declines in March.

• Expectations are for effects of travel disruptions and national lockdowns to be reflected in Q2 numbers.
• Global trade is forecast to post a 13% decline in volume of international goods trade shipments in 2020 under the optimistic scenario beating a 12% fall recorded during the financial crisis in 2009, according to the WTO estimates.
• Pessimistic scenario is for a 32% drop.
• Exports (%yoy, US$): -6.6 v -13.9 est.
• Imports (%yoy, US$): -0.9 v -9.8 est.

UK – The cabinet will decide on extension of the lockdown in the next three days which is expected to be the case given growth in new cases’ increases with other European nations extending measures into May.

• Under the passed law, the government need to decide on new measures by Thursday, Bloomberg reports.
• The government’s Scientific Advisory Group for Emergencies will meet Tuesday and Thursday to assess the latest evidence.
• Government to look to gradual ‘unwinding’ of social distancing rules

Germany – exports rose in February despite slowing trade with China reflecting Germany’s surprising resilience to the coronavirus.

France – President Macron extended the lockdown until May 11.

• The nation had 137k reported coronavirus cases with new ones trending largely down lately (2.9k on Sunday and 4.2k on Monday).

Italy – Lockdown was extended to May 3 despite pressure from businesses.

• Government will be seeking an expansion of the budget deficit in Parliament to fund tis next economic relief package.
• The package is expected to be announced by the end of April and partly funded by EU funds worth around €10bn.
• Authorities approved an initial €25bn stimulus programme last month.

Spain – The nation reported the lowest number of new  cases since March 20.

India – PM Modi extended the national lockdown to May 3.

Australia – Business sentiment plunged to the lowest on record coming in significantly below previous lows recorded during the financial crisis in 2008/09.

South Africa – lockdown extended till end-April 2020

Nigeria – extends lockdown by two weeks in Lagos, Abuja & Ogun States.

Currencies

US$1.0930/eur vs 1.0869/eur last week (Thursday).  Yen 107.70/$ vs 108.93/$.  SAr 18.027/$ vs 18.110/$.  $1.256/gbp vs $1.240/gbp.  0.640/aud vs 0.624/aud.  CNY 7.050/$ vs 7.068/$.

Commodity News

Gold US$1,713/oz vs US$1,656/oz last week (Thursday) – Gold prices hit seven year highs on Tuesday

• Gold prices continue to rise on fears of a steeper economic downturn due to the coronavirus, and also the huge stimulus packages which continued to be offered globally. 
• Spot gold gained 0.2% to $1,716/oz earlier this morning, touching its highest price since November 2012 earlier in the session. US gold futures rose 0.9% to $1,777/oz (Reuters). 
• Yesterday’s fall in US equities supported a higher gold price, and bullish traders continued to buy gold believing that the path of least resistance for prices remains sideways to higher (Kitco). 
• Gold futures are now nearing $1,800/oz after trading in the $1,400s less than four weeks ago, and spreads over spot prices remain wide (Bloomberg).

Gold ETFs 93.0moz vs US$92.0moz last week

Platinum US$756/oz vs US$739/oz last week

Palladium US$2,245/oz vs US$2,184/oz last week

Silver US$15.53/oz vs US$15.13/oz last week