A Silver Lining. Manic Metals Report 06/20/2024

Metals are finding its silver lining as silver leaps and breaks out high after wild swings of volatility.
Value wise based ion the price of gold silver is still cheap, and we are also seeing some shins of turning in some industrial metals that have been stymied by weak manufacturing data out of China but encouraging industrial numbers in the US.
Bloomberg reported that US industrial production increased in May, helped by a broad-based pickup in factory output in a positive sign for a manufacturing sector that has been struggling for momentum.
Aluminum finally looked like it bottomed and copper while swinging on concerns about China’s industrial sector still is headed for a major supply deficit.
Palladium also broke its downtrend and platinum looks ready to make its move.

Money Control Reports that India heat wave could increase demand for metals and energy.
They say that while India’s heat wave is likely to impact farm incomes and inflation negatively, but economists contend that it may end up having a positive impact for industrial production.

Experts indicate that industrial growth will likely stay steady around 5% in the coming months, as electricity and coal production will keep the sector humming. Electricity has a 8% weight in the index, whereas mining accounts for 14.4% share.

Yet copper continues to be the industrial metal that could lead the shortages in the years ahead. We know that many commodities are in a super cycle and copper may be the best example.
Rick Mills of Ahead of the Herd did a great piece on this.
He wrote A “commodity super cycle” is a period of consistent price increases lasting more than five years, and in some cases, decades. The Bank of Canada defines it as an “extended period during which commodity prices are well above or below their long-run trend.”
He points out the reasons why Copper fits that narrative.
He Says that “Copper is one of the most important metals with more than 20 million tonnes consumed each year across a variety of industries, including building construction (wiring & piping,) power generation/ transmission, and electronic product manufacturing. In recent years, the global transition towards clean energy has stretched the need for the base metal even further.
He says that “The world’s largest mining companies, market analysis firms and banks, are warning that by 2025, a massive shortfall will emerge for copper, which is now the world’s most critical metal due to its essential role in the green economy.

The deficit will be so large, The Financial Post stated, that it could hold back global growth, stoke inflation by raising manufacturing costs, and throw global climate goals off course.

Simply supply not keeping up with demand.
Two reasons identified by Sprott: developing a new copper mine is lengthy and expensive, often taking over a decade from exploration to production; and the mining sector has seen long periods of underinvestment, when low copper prices meant reduced exploration budgets and fewer discoveries.”

So, if we end the week it looks like that most of the metals are breaking out to the upside gold is lagging but it’s probably a good time to start putting on some strategies maybe a combination of futures and options to take advantage of this move to the upside.
There is still time to buy physical metals as well as the outlook for physical looks very good supplies of physical metals have been tight in recent months but there seems to be some more availability which could be very good as a surprise could tighten later.
As we have noted before record buying by central banks around the globe it’s another major supportive factor for the metals. The lack of confidence in the stability of the world with weak leadership in the United States and an uncertain presidential election is keeping the market on edge geopolitical risk factors the increased chances of global conflict is another reason why gold bugs are starting to hoard gold and silver.

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