Precious Metals Report 2022/10 - Update
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Something is brewing ... a rally of the century in gold is imminent. Actually, the situation for gold is already almost perfect. Countless geopolitical trouble spots, high inflation and a looming global recession should actually have made gold explode as the safe haven par excellence long ago. If there were not one crucial thing still holding back the gold price: The strong U.S. dollar, caused by the U.S. Federal Reserve (FED), which is steadily raising key interest rates to combat high inflation. This makes gold more expensive in many other currencies and thus less attractive to investors. Nevertheless, many investors continue to look for a storage option for their savings, which are massively devalued by the persistently high inflation rates. A strong transfer from West to East can currently be observed in the case of gold. While gold stocks are being reduced in North America and Europe in particular, the Chinese and Indians are buying vast quantities of gold.
Gold is still obviously undervalued, even though some high premiums had to be paid on the current price recently. This shows that demand is very high and at the same time supply is very limited. This trend is likely to continue, because the supply will continue to decline in the coming years. At the same time, the gold price should be able to present new highs - as soon as a turnaround in the FED's interest rate policy is foreseeable. Investors can still take advantage of this foreseeable trend at an early stage and invest in corresponding gold mining stocks.
Palladium is mainly an industrial metal. It is mainly used in catalytic converters of gasoline vehicles, which is why palladium has developed very well in terms of price in recent years. However, production has been declining for years. Particularly precarious is the fact that sanctioned Russia is the world's largest palladium producer with almost 40%. In addition, the production of the second largest producer, South Africa, is declining more and more. There is a danger that Western countries will experience a massive undersupply. Rising prices are likely to be the consequence.
Platinum has not performed well in recent years. The increasing shift away from diesel as the number one combustion engine led to a decline in demand for platinum, which is mainly used in diesel catalytic converters. The situation looks better for the future. In the foreseeable future, platinum will increasingly be used in catalysts to accelerate the reaction of hydrogen and oxygen in fuel cells. The main focus here is on the mass use of fuel cells in commercial vehicles, above all in trucks.
For both platinum and palladium, a supply slump is to be expected in the coming years, as the important South African mines in particular will not be able to maintain their production to the usual extent. Even rising prices are unlikely to contribute to an improvement.