Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Attention in the metals markets shifted this week from silver to copper and platinum. While big moves in silver and gold prices may be coming down the road, the monetary metals are currently taking a back seat to electrical and automotive metals.
A massive push by the Biden administration to replace gasoline vehicles with electric vehicles is helping to crank up demand for copper. Anything involving electricity involves copper – and lots of it.
Electric vehicles and their massive batteries contain an average of 180 pounds of the metal. That’s six times the copper that’s used in gasoline cars. Even larger quantities of copper are required for EV charging stations and necessary upgrades to electrical grid infrastructure.
Electric vehicles sales are expected to grow from 4% of the market to 10% by 2022. And if the “Zero Emission” lobby gets its way, EVs will be 100% of the car market by 2030 with a federal prohibition on gasoline vehicles.
Regardless of concerns about personal freedoms being trampled in the process, it may simply not be feasible to power tens of millions of new electric cars without enormous upgrades to electricity generating capacity.
That will require enormous quantities of industrial materials, including copper. And the red metal isn’t likely to become any cheaper in the years ahead.
On Wednesday, the copper price surged to a multi-year high and is up nearly 5% for the week as of this Friday recording.
Spot gold checks in at $1,832 an ounce, up 0.3% for the week. And silver shows a weekly gain of 1.0% to trade at $27.57 per ounce.
As mentioned earlier, platinum is on the move. Concerns over a mining supply deficit and the prospect of renewed demand from automakers and jewelers are helping to send platinum prices higher by $126 or 11% this week to trade at $1,269 an ounce.
As long as platinum continues to trade at a discount to gold, it will look relatively attractive to investors and jewelry buyers. And as long as platinum continues to be available at a much cheaper price than palladium and rhodium, it will be sought by automakers who are looking to lower their catalytic converter costs through substitution.
Gasoline cars are still the vast majority sold, with growth in the developing world projected to remain strong. But if electric vehicles do become market dominant over the next decade, that could deal a blow to the demand profile for platinum and palladium absent an increase in their use in battery or fuel cell technologies.
Silver, however, is expected to see major increases in demand from electric vehicle production and solar power generation. Silver is essential in a variety of electronic applications, including cell phones, due to its superior conductive properties.
Silver along with its more prestigious cousin gold may increasingly come to be seen as essential for wealth protection amid rising inflation risk.
With $1.9 trillion in new federal spending coming down the pike, more stimulus checks, and a possible minimum wage hike, price levels in the economy seem bound to rise. If all that isn’t enough, then Federal Reserve officials will keep pumping fresh liquidity into the financial system until consumer price inflation takes off to their satisfaction.
Fed Chairman Jerome Powell gave remarks to the New York Economic Club on Wednesday. He acknowledged U.S. government finances weren’t on “a fiscally sustainable path.” But he insisted federal budgetary issues play no role in the central bank’s policy decisions. And despite his frequent claims of not wanting to take sides in political debates over fiscal policy, Powell suggested Congress shouldn’t even try to rein in the deficit at this time given high rates of unemployment.
In this environment where deficits don’t matter and monetary policy is ultra-loose, investment demand for precious metals is likely to remain strong. Although the pace of public bullion buying isn’t as furious as it was several days ago, market conditions remain tight.
Other U.S. dealers are mostly sold out of privately minted silver bars and rounds – the favorites of value-focused silver investors. Money Metals has secured from its minting partners significant supply of these items and have made them available at MoneyMetals.com.
The supply situation in silver coins is similar, with good availability but higher premiums on some items, particularly Silver Eagles which have become scarce as a result of the U.S. Mint failing miserably to keep up with the retail demand.
Gold, platinum, palladium, and copper products have faced less intense buying pressure. Availability and premiums there are generally not as stressed at this time, although they are still up a fair bit from their pre-Covid levels.
Conditions can change without warning or notice. So can spot prices. Those who are waiting for the “perfect” time to buy would be well-advised to take at least a partial position beforehand – in case the perfect time never arrives.
In other news, Money Metals was just named the “best overall” precious metals dealer in the United States by Investopedia.com, a top authority in the world’s investment industry.
Announcing this tremendous recognition for Money Metals, Investopedia’s analyst Richard Best said that the combination of highly competitive prices, low shipping costs, vast product selection, and an exceptional customer experience landed Money Metals Exchange on Investopedia’s list as the best overall online dealer.
The top online investment news and information hub also made special mention of Money Metals’ secure, insured depository (one of several integrated services that no other major U.S. dealer offers).
And Investopedia lauded our significant news and educational content, along with other investor tools provided daily to assist and educate our customers.
Obviously, we’re deeply honored to achieve this incredible distinction from the world’s leading investment authority, especially because the U.S. precious metals industry is so competitive.
While Money Metals is known for fair, transparent pricing, and fast delivery of customer orders, we’re especially proud of our no-pressure sales approach, wide array of services, public policy initiatives, and significant educational efforts.
The top Investopedia recognition is not the first #1 ranking Money Metals has received from a global ratings group. A few years back, Bullion Directory named Money Metals “Best in the USA” after comparing hundreds of precious metals dealers and surveying over 20,000 investors.
I just want to thank ALL our customers out there — for giving us their trust and their business. We know there are other options available, and we absolutely do not take your business for granted. We intend to keep meeting – and exceeding – your expectations every single time we are given the opportunity to serve you.
Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a great weekend everybody.