2024 is definitely going to be a golden year for gold, copper and other commodities. Take a look…


April 18 (King World News) Gerald Celente:  Gold for June delivery reached $2,448.80 on 13 April before ending the day at $2,374.10, with central banks still on their gold-buying spree.

Individuals in China and India also continue to buy gold and investors are moving to gold amid increasing global tensions, especially in Ukraine and the Mideast.

Gold rose at least 1.2 percent last week and has gained about 14 percent this year.

Gold buyers seemed to ignore worse-than-expected U.S. inflation figures, which raise the odds that U.S. interest rates will remain higher for longer. 

Typically, higher interest rates draw investment away from gold, which pays no interest or dividends.

“With markets hovering around all-time highs, investors are increasingly looking to assets like gold to provide a hedge against any risk of a stock market fall,” CEO Will Rhind at GraniteShares, said in comments quoted by The Wall Street Journal. 

GraniteShares operates the BAR ETF, which concentrates on the value of physical gold…

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The Standard & Poor’s index of global commodity prices has surged 11 percent this year through 10 April, driven by investors’ expectation of a global economic expansion and also their desire to hedge against what many see as prolonged inflation.

Reports in late March and early April showed manufacturing in China and the U.S. rebounding. The news set off another round of commodity purchases and investment.

Crude oil’s price has climbed 16 percent this year. Supplies have shrunk as OPEC+ nations have held back production. A looming expansion of the Mideast war has hiked futures prices. Also, gasoline prices typically rise during the summer travel season.

Energy has been the second-best performing sector in the Standard & Poor’s 500 index this year.

Copper has risen 10 percent and its futures prices have notched gains as much as 16 percent, sending prices to their highest since June 2022. 

Gold has risen 14 percent, setting a series of records in the process and blowing past $2,400 this month. 

Prices for raw materials had been sliding for 18 months post-COVID as manufacturing worldwide, and particularly in China, slowed markedly. That helped reduce inflation by two-thirds in the U.S. 

Now the hike in commodity prices is working against central banks’ efforts to beat down inflation with high interest rates. Higher commodity prices eventually permeate an economy, raising factory costs and retail prices.

Expectations that the U.S. Federal Reserve will cut its key interest rates three times this year has helped drive equity markets to new heights. News last week that inflation has plateaued above the Fed’s 2-percent target rate has cast doubt on that forecast. (See “Last Week: Hot Inflation Report Cools Markets” in the Economic Update section of this issue).

Surging commodity prices make it more likely the central bank will reduce its number of rate cuts and delay the first one past its June meeting.

Commodities in general are not entering a new supercycle as they did in 2021, when frenzied buying sent prices into the stratosphere.

Demand will remain strong for crops because the growing frequency of droughts and other weather extremes and disasters has heightened the need to store grains and other basics.

The market for industrial commodities will increase but be somewhat muted by modest global growth. 

China’s surging need for metals required for green energy technologies will not be open-ended. The overproduction of EVs and EV batteries there has set off a price war and Western nations will put up new trade barriers to keep China’s excess factory output from swamping domestic producers.

Gold’s price is setting record after record, as we report in “Gold Does It Again, Sets New Record Above $2,400” in this issue—but it is not the only metal whose value is surging.

Investors are more confident that high interest rates will not curb worldwide economic growth, sending them back to commodities both as investments and as hedges against continued inflation, as we report in “Commodity Prices Jump as Investors Smell Global Economic Rebound” in this issue.

Copper and other essential industrial metals are seeing their prices swell. Supplies are tightening as China’s economy returns to life, lifting metals’ price gains above those of stocks.

Six of the metals have together risen 8 percent in price this year, compared to the MSCI global stock index, which is up 6.3 percent. Copper alone is up 10 percent, reaching $9,753 per ton on 9 April, its highest in 15 months.

Copper is essential in everything from electric cars to smartphones. China, which accounts for half the world’s copper usage, has needed 12 percent more so far this year than last, Goldman Sachs reported.

The metal is known as “Dr. Copper” because changes in its price tend to offer a prognosis of the global economy’s health.

Copper’s bull market on the London Metal Exchange is its strongest in three years, The Wall Street Journal noted.

Investors’ renewed enthusiasm comes at a time when miners and processors are running short of supply.

Last month, Chinese copper processors made plans to cut back production due to lack of ore. This year, 0.7 percent less copper will be mined, according to Morgan Stanley. There also will be 0.4 percent less refined zinc, Canadian bank Macquarie said.

On 11 April, zinc’s price rose to $2,756 a ton, a price not seen since last April.

In addition to rising demand from China, “it feels like we’re past the worst in the construction sector in the U.S. and Europe,” Ole Hanson, Saxo Bank’s chief commodities strategist, said in comments quoted by the Financial Times.

Construction demands steel, which is made up of iron ore, nickel, manganese, and other metals.

Also, the Institute for Supply Management’s tracking index for U.S. manufacturing activity grew last month for the first time since September 2022, the group said.

This is all coming as we see inflation expectations globally starting to increase, so investors are looking at commodities—especially industrial commodities—as an inflation hedge,” Saniel Ramjee, a strategist at Pictet Asset Management, told the FT.

King World News note:  The idea of lowering rates into another wave of inflation is madness and central banks know this. The 40+ bull market in bonds ended and bonds have now entered a lengthy bear market. That will mean higher rates over time as well as continued inflation. However, the current global scenario is far worse than the 1970s because of the enormous debt load that all developed nations have. The debt is so crushing that it does not allow for another Volcker moment. Meaning rates cannot be raised the way Paul Volcker did in order to choke off inflation because of the staggering debt load in the West and East. The bottom line is all of this is going to create a historic bull market in gold that dwarfs what was seen in the 1970s.

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