For those of you who would prefer to listen:
The price of Gold went parabolic. In fact, it’s been the case for pretty much all precious metals. The drivers are many: Ever-increasing geopolitical activity, sticky inflation, a weak Dollar and global institutions seeking alternatives to safe American assets. Some central banks are even seeking diversification from their own currency risk. The reasons have been many and plentiful. Ultimately, Gold has been a move to a “real asset” store of value. Gold went from $4k to $5K to $5500 seemingly in an instant.
It’s not just precious metals that moved. Copper, Aluminum and Nickel have hit either record or multi-year highs this week. It’s a signal that global economic activity is improving. Demand is growing.
Silver has also benefited from concerns that China’s new export rules may lead to lower shipments. The Chinese government is rumored to limit just 44 companies to export the metal. So far, those restrictions have not yet been implemented. China shipped over 5,000 metric tons of Silver last year. That was the most since 2008.
Silver is a key component in the manufacturing of circuit boards, electric vehicles and solar panels. It’s believed that China is prioritizing domestic consumption, resulting in lower quantities available for export. Protectionism is everywhere. Markets have become far less free-flowing with trade.
China is also shipping less Aluminum. Exports of unwrought aluminum dropped 8% last year from the prior to just over 6 Million tons. That decline in supply from the world’s biggest producer resulted in higher Aluminum prices.
Copper is the ultimate industrial metal. Because it’s used in so many areas, from electronics to construction, Copper is a key barometer in economic activity. It is playfully said that the metal has a PhD in Economics, referred to as Dr. Copper.
China consumes roughly 60% of global Copper supplies. It has been a key ingredient in the country’s economic growth. AI has made Copper even more coveted. The rapid data center buildout has turbocharged Copper demand.
China has been importing more copper, especially in the second half of 2025. Much of copper’s rally last year was built around the flow of metal into the United States amid fears that Trump would impose import tariffs, with those concerns easing after duties were imposed only on some copper products.
You know who else has been coveting these metals? Traders and speculators. There have been massive flows into futures contracts and exchange-traded funds. The parabolic moves sure seem to indicate an excess of speculation. When the momentum ends, price gains do too. It’s just never clear when. Perhaps Friday was the start.
The one commodity that had not been rallying just did. Falling Oil prices were instrumental in slowing inflation. Prices at the pump were at multi-year lows. They’re heading back up. That’s inflationary. Higher energy prices will make it harder for the Fed to cut rates. It will make it harder for Americans to pay their bills.
The price of WTI rallied to the mid-$60s this week. Smaller than expected production was a reason. Freezing weather contributed to that. Growing concerns that the US might strike Iran is an even bigger one. The Market is presently well-supplied. But global supplies are vulnerable to reversals with increased Mideast conflicts.
Fighting inflation has been a Fed job. The President has not been pleased with the head of the Fed. To that end, he just nominated Powell’s replacement. His name is Kevin Warsh. The announcement sent metals cascading lower and Bond yields higher.
This from one of our Wall Street sources:
“President Trump has picked, everyone’s least favorite candidate…If you get a few cuts now simply to appease the President, you may well get more hikes later. Moreover, because Warsh has been a policy Hawk his entire life, his newfound Dovishness looks very suspect. Powell might sense the same thing, which is why there is a risk of him sticking around. If he does, Warsh would be a very weak Fed Chair. Warsh would likely be a weak Chair regardless, and it is important to remember that one man cannot exert his will on the FOMC. Many on the FOMC would share the same concerns. I have a tough time seeing Warsh sway this FOMC.”
Despite these inflationary pressures and geopolitical risks, the Stock Market continued to hit all-time highs. The S&P reached 7K for the first time. Earnings Season continues to come in better than expected. So far 165 of the S&P 500 have reported 15% earnings growth and 7.4% revenue growth. There have been some disappointments. Microsoft is an example of that. But the overall tone for Corporate America has been strong.
Mastercard reported a 15% increase in revenue compared to a year ago. “The overall macroeconomic environment is supportive and we continue to see healthy consumer and business spending.” That, from CEO Michael Miebach.
Royal Caribbean had positive things to say about the Consumer, too. The Cruise-line company reported another record quarter. Management said that since its last earnings call, it has enjoyed the highest seven booking weeks in its history.
People are still buying iPhones. Apple revenues jumped 16% on the back of record iPhone sales. CEO Tim Cook said demand for the iPhone 17 is “staggering”. China was a clear bright spot. Revenue from the Asian nation grew nearly 40%, a sign that this massive Market is turning around. It’s a big deal for the Cupertino company. The challenge is going to be dealing with the potential for higher input costs from the commodity boom.
There’s clearly so much going on. We are all over it and have your back. It’s all very investable.
Have a nice weekend. We’ll be back, dark and early on Monday.
Mike
