Major Optimism for Platinum, Silver, and Copper / Commodities / Metals & Mining
Attention in the metals markets shifted this week fromsilver to copper and platinum. While big moves in silver and gold prices maybe coming down the road, the monetary metals are currently taking a back seatto electrical and automotive metals.
A massive push by the Biden administration to replacegasoline vehicles with electric vehicles is helping to crank up demand forcopper. Anything involving electricity involves copper – and lots of it.
Electric vehicles and their massive batteries contain anaverage of 180 pounds of the metal. That’s six times the copper that’s used in gasoline cars. Even largerquantities of copper are required for EV charging stations and necessaryupgrades to electrical grid infrastructure.
Electric vehicles sales are expected to grow from 4% ofthe market to 10% by 2022. And if the “Zero Emission” lobby gets its way, EVswill be 100% of the car market by 2030 with a federal prohibition on gasolinevehicles.
Regardless of concerns about personal freedoms beingtrampled in the process, it may simply not be feasible to power tens ofmillions of new electric cars without enormous upgrades to electricitygenerating capacity.
That will require enormous quantities of industrialmaterials, including copper. And the red metal isn’t likely to come any cheaperin the years ahead.
In particular, platinum is on the move. Concerns over amining supply deficit and the prospect of renewed demand from automakers andjewelers are helping to send platinum prices more than 13% higher this week.
As long as platinum continues to trade at a discount togold, it will look relatively attractive to investors and jewelry buyers.
And as long as platinum continues to be available at amuch cheaper price than palladium and rhodium, it will be sought by automakerswho are looking to lower their catalytic converter costs throughsubstitution.
Gasoline cars are still the vast majority sold, withgrowth in the developing world projected to remain strong. But if electricvehicles do become market dominant over the next decade, that could deal a blowto the demand profile for platinum and palladium absent an increase in theiruse in battery or fuel cell technologies.
Silver, however, is expected to see major increases indemand from electric vehicle production and solar power generation. Silver isessential in a variety of electronic applications, including cell phones, dueto its superior conductive properties.
Silver along with its more prestigious cousin gold mayincreasingly come to be seen as essential for wealth protection amid risinginflation risk.
With $1.9 trillion in new federal spending coming downthe pike, more stimulus checks, and a possible minimum wage hike, price levelsin the economy seem bound to rise. If all that isn’t enough, then FederalReserve officials will keep pumping fresh liquidity into the financial systemuntil consumer price inflation takes off to their satisfaction.
Fed Chairman Jerome Powell gave remarks to the New YorkEconomic Club on Wednesday. He acknowledged U.S. government finances weren’t on“a fiscally sustainable path.” But he insisted federal budgetary issues play norole in the central bank’s policy decisions.
And despite his frequent claims of not wanting to takesides in political debates over fiscal policy, Powell suggested Congressshouldn’t even try to rein in the deficit at this time given high rates ofunemployment.
In this environment where deficits don’t matter andmonetary policy is ultra-loose, investment demand for precious metals is likelyto remain strong. Although the pace of public bullion buying isn’t as furiousas it was several days ago, market conditions remain tight.
Although Money Metals is still fairly well supplied,other U.S. dealers are mostly sold out of privately minted silver bars and rounds –the favorites of value-focused silver investors.
The supply situation in silver coins is similar, withsome availability but higher premiums on certain items, particularly Silver Eagles whichhave become scarce as a result of the U.S. Mint failing miserably to keep upwith the retail demand.
Gold, platinum, palladium, and copper products have facedless intense buying pressure. Availability and premiums there are generally notas stressed at this time, although they are still up a bit from their pre-Covidlevels.
Conditions can change without warning or notice. So canspot prices. Those who are waiting for the “perfect” time to buy would bewell-advised to take at least a partial position beforehand – in case theperfect time never arrives.
By Mike Gleason
Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.
© 2021 Mike Gleason - All Rights Reserved
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