Gold and commodities are set to soar
Don’t be misled by market stasis. Events in the Middle East are not being taken seriously in financial markets when in fact they are driving the global economy off a cliff.
Suddenly, gold and silver appear to have bottomed out and are marching higher. Led by energy, the entire commodity complex is donning its marching boots and setting off for higher pastures. This is the reaction to the US blockade in the Sea of Oman. Mine supplies of base metals and silver are threatened by energy costs and shortages of vital chemicals such as sulphuric acid. The impact on consumer prices is being seriously underestimated.
It’s not just supplies of energy and downstream products such as sulphuric acid and fertilisers being restricted as a result of America’s war on Iran, and now its blockade of a blockade. Other national exporters of these vital commodities are hoarding their supplies, withdrawing them from global markets. There are signs that China is also tightening up on silver and rare earths. Why would they do otherwise?
Paper prices under-represent the impact. Dated Brent FOB Northern Europe is trading at $145—$150, over 50% above paper futures, according to today’s Daily Telegraph. Think about that for a moment!
Yet markets ignore the reality, just as the blockade intensifies.
