After a prolonged bear market, commodities reached a major inflection point in 2020. In response to the global pandemic, governments began unprecedented money creation. Ultimately, I believe this will lead to a decade of sharply higher inflation and a 10-year bull market in precious metals.
(Bloomberg) -- Gold plunged while copper soars, with increasing optimism that a vaccine will spur a global economic recovery from the pandemic.Copper surged to a seven-year high in London while gold slid below $1,800 an ounce for the first time since July, with the sell-off accelerating after liquidation pushed it through a key technical support level. Gold’s decline quickened pace as investors continued to swap into riskier assets looking to profit from an eventual recovery from the pandemic.The divergence underscores how investors are increasingly turning away from gold, considered a haven in times of economic stress, in favor of copper, seen as a bellwether for the global economy and an important part of the transition to low-carbon energy resources.Gold prices are heading for a third weekly drop, having declined 13% from its record high in August. Copper rallied for a fourth day as other industrial metals climbed, while global stocks are on track for the best month on record with valuations near the highest in about 20 years. A gauge of global copper producers rose to the highest since January 2013, led by Teck Resources Ltd., Vale S.A. and Antofagasta Plc.China’s rapid economic rebound has driven its imports to record levels this year, helping to offset lower demand in the rest of the world. The country’s latest factory gauge, due Monday, is expected to show activity in the top copper consumer continuing a steady expansion.On Friday, data from the Shanghai Futures Exchange showed copper stockpiles in its warehouses falling to the lowest since late 2014.“The optimism sparked by positive vaccine news has particularly impacted gold, which continues to slump despite a weaker dollar,” said Tai Wong, head of metal derivatives trading at BMO Capital Markets. “It’s below the 200-day moving average now, which could trigger more technical selling.”Bullion’s steep decline was in line with continued outflows of gold exchange-traded funds, which are now headed for their first monthly outflow this year. The funds have been a crucial support pillar for bullion in 2020, so their current erosion has significant implications for the price.Positive vaccine developments, which started at the beginning of the month with the Pfizer Inc. announcement, have seen bullion on a downward path even though there are uncertainties surrounding the shots.U.S. President Donald Trump’s statement that he will relinquish power if the Electoral College affirms Democrat Joe Biden’s win also signaled that there’ll be a peaceful transfer to the new administration, though he signaled he may never formally concede defeat and may skip the Democrat’s inauguration.“Gold has moved into the next ‘down-leg’ of its correction phase,” according to United Overseas Bank Ltd. market strategist Quek Ser Leang. A break of the support zone between $1,760 and $1,780 would open up the way for further weakness toward the $1,600s, he said.Spot gold fell 1.5% to $1,788.53 an ounce at 2:05 p.m. in New York. Bullion for February delivery declined 1.3% to settle at $1,788.10 an ounce. Silver dropped 3.6%, while platinum and palladium advanced. Copper for three-month delivery on the London Metal Exchange rose 1.3% to $7,499.50 a metric ton. The Bloomberg Dollar Spot Index fell 0.1%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- South Africa’s main stock benchmark index briefly rises as much as 0.5% to the highest since Aug. 6, as index heavyweight Naspers Ltd. and gold producers recovered on a risk-on day.FTSE/JSE Africa all share index pares gains to be little changed at 10:23 a.m in Johannesburg with 68 of the 141 listed companies advancing. Mr Price Group Ltd. rises for a second day, surging 6%, to the highest in two-weeks after the retailer published its first half earnings.Index for general retailers rise 2.3%, while food and drug sellers +0.3%Woolworths Holdings Ltd. +2.4%, Truworths International Ltd. +1.9%, Foschini Group Ltd. +1%, Motus Holdings Ltd. +1.4%, Pepkor Holdings Ltd. +0.4%Bid Corp Ltd. +0.4%, Clicks Group Ltd. +0.5%, Pick n Pay Stores Ltd. +0.6%, Spar Group Ltd. +0.1%Naspers, with a 19% weighting on the index, advances 0.2% to provide biggest boost to the index as partly owned Tencent Holdings Ltd, gains in Hong Kong.Gold companies drive the index for resource stocks higher for a fifth consecutive session. FTSE/JSE Africa Mining index up 0.6% to the highest in mre than one week.Sub-index for gold companies rise 2.2%, the biggest intraday jump in two weeks as disappointing U.S. data drives bullion prices higher.Gold Fields Ltd +2.3%, AngloGold Ashanti Ltd. +1.9%, Harmony Gold Mining Co. +3.3%, DRDGold Ltd. +4.1%, Pan African Resources Plc +2.7%Platinum companies up 1.6%Sibanye Stillwater Ltd. +1.7%, Anglo American Platinum Ltd. +2.6%, Impala Platinum Holdings Ltd. +1.4%, Northam Platinum Ltd. +1.1%, Royal Bafokeng Platinum Ltd. +0.6%Diversified miners BHP Group Plc -0.1%, Anglo American Plc -0.1%Life Healthcare Group Holdings Ltd. falls 0.3% as company sells Scanmed in Poland to Abris Capital Partners, a central European private equity fund manager.Foreigners remained net sellers of South African stocks for an eight consecutive day Wednesday, disposing of 203 million rand worth of shares, according to exchange operator JSE Ltd.NEWS:South African Treasury Calls Off Bond Switch Auction ProgramFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.