Surging AI Demand and Enemies Foreign and Domestic. Manic Metals Report 06/06/2024

Could the US Election lead to internal conflict?  Id so you better own gold according to Ray Dalio!

Metals, both precious and industrial, are back on the rise ahead of this week’s jobs report as the increased possibility of Fed rate cuts is back on the table as well as surging geopolitical risk that is hitting the market on many levels.
The counterbalance to the rally in metals is the fact that the ECB cut their interest rate the head of the Federal Reserve which could cause the dollar to rally’s putting downward pressure on metals. Still peer pressure increases the odds the Fed will cut.
Yet big geopolitical risks will support metals.

Not only are we seeing the real risk of escalation in the war between Ukraine and Russia, but Ray Dalio the billionaire Founder of Bridgewater associate is warning that ahead of the US election that investors may need to have gold in their portfolio to protect themselves from the possibility that the US election could lead to “internal conflict”.

Dailio says that should be in every investor’s portfolio, as it is the third-largest reserve currency, trailing only the U.S. dollar and the euro.

Dalio said according to Kitco News that “Diversification is even more important to investors’ returns than making the right decisions, and gold is a key diversifier.

Dailio said that that among the most significant risk factors in 2024 are the threat of internal conflict surrounding the elections in the United States. “There are two questions related to that,” he said. “Will the elections be accepted by both sides? And what are the consequences of that? We honestly don’t know the answer.”

He also warned that t history shows that “economic warfare precedes military warfare,” and that while he doesn’t expect an imminent military conflict between the largest and second-largest economies and militaries, on the issue of Taiwan, the one-China policy “will not go on forever.”

Gold risk is also getting a bounce from increased risk that the Russia Ukraine war is going to suck in the US into an even more active role.
As I wrote in the Energy Report that President Joe Biden authorized Ukraine to use U.S. weapons to strike targets inside Russia, a major shift in American policy that has raised the risk of further escalation in the war the war that started on Biden’s watch.
Now Russian President Vladimir Putin has threatened Germany and the United States as a response he could provide long-range weaponry to NATO adversaries to strike targets in the West in response to the move by the two countries to authorize Ukraine to use arms it provided on sites within Russian territory.

True perhaps accentuate that threat Putin is sending warships to the Caribbean for war games.
The AP reports that “The U.S. has been tracking Russian warships and aircraft that are expected to arrive in the Caribbean for a military exercise in the coming weeks, in a Russian show of force as tensions rise over Western military support for Ukraine, U.S. officials said Wednesday.
The ships also are expected possibly to make port calls in Venezuela and Cuba, as Russia establishes a Western Hemisphere military presence that the senior Biden administration officials said was notable but not concerning.’  And you know if the Biden administration tells us not to be concerned there’s nothing to worry about. Other than the possibility of nuclear annihilation.
Yesterday we got our expected to bounce on Palladium and we still think the Palladium could be the sleeper among the metals obviously copper is one of the most important commodities for the future as we head into the artificial intelligence age and the expected demand surge for electricity that will keep copper wire humming.
We’re starting to see gold outpace silver once again which is been the story for most of the precious metals rally, we do expect both gold and silver to hit all-time highs of course silver has a much longer way to go.

So, the big story remains the same artificial intelligence is going to be driving the industrial metals and the election and geopolitical risk is going to keep the precious metals humming the markets gonna be watching central bank buying especially out of China and India to see if there’s a rebound in their diversification from the dollar in the coming months.

You can still get the Phil Flynn Energy Report trade levels as well. Just call Phil Flynn at 888-264-5665 or email me at pflynn@pricegroup.com

 

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