Silver mining margins likely to be squeezed. According to the CPM Group, the cost of mining silver at primary silver mines continued to increase at a double digit pace in 2012. Silver cash costs reached $10 in 2012, up 19.0% from $8.4 in 2011. This strong increase in costs, coupled with the 12% drop in the annual average price of silver resulted in lower margin among primary producers. Falling margins should result in tighter silver supply in the future as miners reassess profitability of their operations.
Key events to watch this week. The Bank of Japan will likely confirm its aggressive policy stance following a tacit green light received from other G7 members and tentative signs that the policy course is working from its latest GDP reading and strong upswing in machine orders. Investors will be firmly focused on any indications of the Fed readying its exit from ultra-easy policy from its meeting minutes. However, many investors have the habit over-interpreting the minutes, which could contribute to asset price volatility. The outgoing governor of the Bank of England appeared more optimistic about the state of the UK economy last week, and we will find out this week if he chose not to vote for more easing when the BoE releases the minutes from its last meeting.
ETFS Physical Palladium Shares ETF (NYSEArca: PALL)
