Precious Metals Review
Never Miss Investing News from Monex
Week of September 17, 2021
Quotes of the Week
“Stocks fell on Tuesday, continuing their recent pullback even after fresh data showed that inflation climbed at a slower pace than economists expected in August.
The S&P 500 declined 25.68 points, or 0.6%, to 4443.05. The Dow Jones Industrial Average shed 292.06, or 0.8%, to 34577.57. The technology-heavy Nasdaq Composite fell 67.82, or 0.4%, to 15037.76.
Major U.S. stock indexes rose after the opening bell before turning lower. The market has broadly pulled back this month amid concerns that rising cases of the Delta variant of Covid-19 could weigh on economic activity and that stocks have rallied for too long without a correction. The S&P 500 has now declined in six of the past seven trading sessions.
“I’m hearing more and more calls for a correction in the market,” said Jack Janasiewicz, a portfolio manager at Natixis Investment Managers Solutions.
The Labor Department’s consumer-price index rose a seasonally adjusted 0.3% in August from July—lower than the 0.4% that economists surveyed by The Wall Street Journal expected. The rise is slower than the 0.5% monthly increase in July, and down markedly from June’s 0.9% pace.
Investors have been closely following inflation data for signs of whether the Federal Reserve might begin to scale back its easy-money policies. Tuesday’s inflation reading appeared unlikely to change the Fed’s plans, Mr. Janasiewicz said. Many Fed officials have said in recent public statements that the central bank could begin reducing, or tapering, its monthly purchases of bonds by the end of this year if the economy performs as they anticipate.
“There is this interesting moment we’ve got in markets where Delta is still a concern, but at the same time you’ve got central banks tapering or about to taper,” said Edward Park, chief investment officer at U.K. investment firm Brooks Macdonald. “It is an interesting time for markets, and that is why it is a bit skittish.”
Fed officials have said they expect the current spike in inflation to be temporary, pointing to supply bottlenecks that have arisen in various industries as the economy has reopened from pandemic-driven lockdowns.
But some investors fear inflation could prove to be sticky. August inflation was high by the standards of recent years, with the Labor Department’s main index up 5.3% from a year ago.
“It is hard for us to say, ‘Well folks, all these things are transitory and come January 2022, we expect everything to be back to normal,’” said Carsten Brzeski, ING Groep’s global head of macro research. “Every data point that shows that inflation is more than only transitory, we get closer to tapering.”
The yield on the benchmark 10-year U.S. Treasury note fell sharply on Tuesday’s inflation data, dropping to 1.276% from 1.323% Monday. Yields fall when bond prices rise.
All 11 sectors of the S&P 500 ended the day in negative territory, with energy and financials posting the steepest losses.
“Quantum chemists believe that gold, silver, and copper could be promising candidates for hydrogen storage.
This has huge implications for green energy, as hydrogen is incredibly volatile and challenging to store at ambient temperatures. Dr. Cristina Trujillo, a research fellow at Trinity College Dublin’s School of Chemistry, said in an interview with phys.org, "Among the greatest challenges facing humanity is the growing need to stop global warming… For decades now many research groups across the world have put their efforts into this issue. One of the most studied alternatives has been hydrogen as a clean and CO2-free energy source, but it presents multiple problems due to its reactivity, and low density and stability. Our contribution here—made via quantum chemistry techniques—has been to show that gold, silver and copper hydride complexes are very likely to effectively retain hydrogen in a stable manner. We hope that this work will have multiple applications in time to come."
Dr. Trujillo’s team has been examining compound-bonding interactions for years. Her team has been investigating regium bonds, which refer to interactions between copper, silver, and gold nanoparticles and electrons of other materials.
According to Tore Brinck of the KTH Royal Institute of Technology in Stockholm, “Chemists tend to think that bonding and interactions of metals and metal nanoclusters are very different from those of normal molecules. It is important to see the similarities, so that we can use knowledge from traditional chemistry in the design of a better catalyst.”
Precious metals have been in something of a holding pattern of late. They’ve gone up and down quite a bit this summer without much change overall. With the threat of inflation and general market uncertainty in the air, many investors have been anticipating a breakout for gold for months. However, as the world navigates the COVID variants and climate change, it has been hard to for precious metals to gain purchase.
Silver’s environmental applications are already well known, as the metal is key component in 5G towers, solar panels, and EVs. Gold, meanwhile, has had some interesting scientific applications itself. If gold and silver can contribute further to environmentally friendly technology, their long-term prospects will only brighten. Investors have an opportunity to make a run on precious metals while they are in stasis.”