You May Have Overlooked These "Sleeper" Precious Metals / Commodities / Metals & Mining
Precious metals markets got off to arocky start this week as Wall Street celebrated promising developments on thevaccine front.
On Monday, stocks surged while gold and silver soldoff hard. That selling didn’t bring downside follow through, however. Themetals held trading range support levels and pared some of their earlier lossesheading into this Friday the 13th.
A metal we don’t often talk abouttraded up to an amazing record high earlier this week. The noble metal rhodiummade palladium look dirt cheap by comparison – commanding as much as $15,000per ounce.
Like platinum and palladium, theprimary application for rhodium is catalytic converters for cars and trucks. Itis often alloyed with platinum and palladium to enhance resistance tocorrosion. Rhodium is also used in some types of jewelry.
The high-flying metal is available to investors through Money Metals Exchange in very limited quantities in the form ofone-ounce and 5-ounce bullion bars. They come sealed and authenticated byeither of the reputable mints Baird &Company or PAMP Suisse.
That said, we don’t necessarily recommend buying rhodium at these levels. It’scertainly not suitable for all investors. Those that own rhodium and want totake profits.
We would suggest that those looking todiversify their metals portfolio beyond core gold and silver holdings considerplatinum bullion coins or bars instead. The market for platinum is more liquidand the price per ounce is much more affordable.
Platinum is more than twenty times rarer than gold. It isso rare that all of the platinum ever mined could fit into a room measuring 25feet by 25 feet.
The case against platinum is that its demand profile isvery narrow, dominated by the automotive industry, and is generally not held inmonetary reserves like gold.
In large part due to a big diesel-emissions scandal a fewyears ago, platinum has been out of favor for use in auto catalysts asmanufacturers have turned more to its sister metal palladium. But withpalladium now costing more than double what platinum does, incentives forsubstitution are strong.
There are also incentives for investors to substitute orsupplement with platinum as part of their hard asset mix. Inflows into the topplatinum exchange-traded fund have surged this year along with the broader waveof gold and silver buying.
It won’t take much of an increase in demand for platinumto overwhelm mining supply. The platinum producing industry, such as it is,will struggle to arrest declining output levels.
As a hard asset, platinum should benefit from theinflationary environment the world now faces. Meanwhile, if there’s an economicrecovery, platinum prices would receive a new tailwind from risingindustrial activity.
On a historic basis, platinum isextremely undervalued versus gold, palladium, and most definitely rhodium.
A few years ago, though, an investorcould have purchased rhodium at a fraction of today’s price. As recently asearly 2017, rhodium sold for less than $1,000 per ounce.
Rhodium’s explosive move since couldpotentially play out on a similar scale in other metals in the years ahead.Perhaps platinum, perhaps silver, could enjoy a massive multi-fold run up onsupply scarcity and surging demand.
The CEO of First Majestic, one of the world’s leading silver producers and apast guest here on our podcast, expects to see much much higher silverprices. First Majestic founder KeithNeumeyer said in a recent interview thatsilver will become increasingly essential to alternative energy components ofthe “green economy” that politicians around the world are racing to transitionus into.
Keith Neumeyer: I still believe today that silver isgoing to go to triple digits, and I get laughed at all the time, but I'm notgoing to get knocked off my game just because some people think I'm talking myown book. I actually believe for real fundamental reasons.
If we're going to go green and we're going to doeverything we need to do as a human race to evolve this species to where wewant to go, we need a lot more silver, and copper as well, but obviously, I runa silver company. So, I'm going to keep pushing as hard as I can growing thisbusiness, stay very much focused on silver. In one of these days, I will bevindicated when I see triple digits.
Triple digit silver may not be that faroff. Considering how rapidly five-digitrhodium came to fruition, silver could see a $100 handle on a relatively modestbull market advance.
Well, as the presidential electioncontinues to be contested and all eyes focus on Georgia to determine thebalance of power in the U.S. Senate, the Republican-controlled Senate quietlymoved this week to change the makeup of the Federal Reserve Board.
Senate Majority Leader Mitch McConnellfinally cleared the way for a vote on President Donald Trump’s nominee JudyShelton.
Her nomination is bitterly opposed byDemocrats who have derided her past support of a gold standard. SomeRepublicans have wavered on supporting her because of her unconventional viewson monetary policy. But it appears that she now has the votes to be confirmedsometime next week.
We doubt Shelton will move the centralbank toward sound money principles. But she could serve as a powerful voice ofdissent on monetary policy decisions.
The Fed operates based on the myth thatits monetary activism is supported by all the leading experts.
It’s true that the economists who workfor banks, for Wall Street, and for the government tend to endorse the Fed’sinflationist philosophy. But there are entire schools of economics dedicated toopposing it.
There is also thousands of years ofhistory demonstrating that inflationary fiat monetary systems ultimately fail.
Currency based on hard money – gold andsilver – may be inconvenient for the agendas of powerful financial and politicalinterests. But precious metals will always represent real value which can neverbe replicated by paper notes or computer digits.
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.
© 2020 Mike Gleason - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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