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Global Metal Prices Surge Led By Zinc And Aluminum

Prices for base metals are surging led by zinc which has reached its highest level since 2007.

The latest increase in metals prices comes after European…

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This article was originally published by Baystreet

Prices for base metals are surging led by zinc which has reached its highest level since 2007.

 

The latest increase in metals prices comes after European smelters became the latest casualties in a global energy crisis that’s knocking supply offline and ratcheting up pressure on manufacturers.

 

The price of zinc rose as much as 6.9% on the London Metals Exchange, and a gauge of six industrial metals is closing in on an all-time highs Thursday (October 14).

 

Aluminum, one of the most energy-intensive commodities, is at its highest level since 2008. Copper bounced closer to the $10,000 U.S. a ton mark and spreads are pointing to a sharply tighter market.

 

Spot copper contracts are trading at their biggest premium over futures in nearly a decade as global inventories shrink.

 

Five out of the six base-metal contracts on the London Metals Exchange are in backwardation, signaling broad pressure on spot supply.

 

The price jumps are due to supply cuts spreading from China to Europe, as energy shortages drive up costs for electricity and natural gas, threatening more inflationary pressure from rising commodity prices.

 

Nyrstar, one of the biggest zinc producers in the world, said it will cut output at three European smelters by up to 50% due to rising power prices and costs associated with carbon emissions.

 

So far, the energy crisis has had an outsized impact on supply but concerns about demand are also rising as manufacturers face a simultaneous surge in raw material prices across the board.

 

Strains in China are particularly evident, where factory-gate prices rose at their fastest pace in almost 26 years in September. It’s a surge that could spill over to other economies given the nation’s role as the world’s largest exporter. 

 

Some Chinese smelters have reduced runs in recent weeks as they struggle with an electricity shortage fueled by record coal prices.

 

 

Precious Metals

Big Banks Believe Bitcoin May Very Well Become the New Gold

Bitcoin (CCC:BTC-USD) has been a well-known entry point into the world of cryptocurrency and defi. 
Source: Vladimir Kazakov / Shutterstock.com
Its ascent,…

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Bitcoin (CCC:BTC-USD) has been a well-known entry point into the world of cryptocurrency and defi. 

Source: Vladimir Kazakov / Shutterstock.com

Its ascent, along with that of Ethereum (CCC:ETH-USD), paved the way for a wave of cryptocurrencies. In a sense, those two pioneers took a back seat of late while smaller projects received loads of attention. 

First adopters were keen on Bitcoin long ago. They’ve since become interested in smaller projects for the most part. 

But now, something interesting is happening that relates to Bitcoin. More traditional investors, including those who count on finance houses, like JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C), are moving into Bitcoin. 

Lagging Demand 

You could be forgiven for believing that Bitcoin’s best days were behind it over the past few months. After all, it had hovered in the $40k range for quite some time. It seemed like that might be its new ceiling moving forward. 

But thanks to slower adopters there is something very interesting happening with Bitcoin. The narrative of Bitcoin as a hedge against inflation is reemerging. 

JPMorgan Chase analyst Nikolaos Panigirtzoglou noted that Bitcoin is drawing institutional investor demand as a hedge against inflation in an Oct. 6 note to the bank’s clients. 

If you remember back to late 2020 and early 2021 Bitcoin also drew significant interest as a hedge against inflation back then. 

BTC and the Gold Hedge

A clue as to the renewed interest in Bitcoin can be found in the year-to-date prices of gold. Gold has decreased in price by 6.5% in 2021. Investors expect that gold should rise in this environment as inflation concerns are mounting, but that doesn’t seem to be the case. Weak gold demand has caused prices to fall below $1,800. 

So, given that gold isn’t fulfilling its role as a traditional buffer against inflation, institutional investors have looked to Bitcoin in recent weeks.

As a consequence, Bitcoin prices have increased 30.81% since Sept. 29, rising from $45.5k to above $54k. Meanwhile, gold prices are down a few percentage points over the last month. Citigroup has also noted an uptick in interest regarding Bitcoin and crypto recently as well. 

Itay Tuchman is the global head of foreign exchange at CitiBank. He recently spoke about the intersection of cryptocurrency and ‘tradfi’, aka traditional finance, at the Token 2049 conference in London. 

He stated that institutional investors who began learning about defi starting with Bitcoin, became immediately interested in wider implications.

“It was almost instantaneously a narrative about investing in crypto ecology, and decentralized networks and different kinds of financial architecture in the future,” Tuchman said. “[It] became a technology—an innovation-investment conversation—in a matter of seconds.”

Does that mean that Citigroup will soon break the mold and become the first bank with its own crypto custodian? 

Tuchman seemed to imply that the chances are rising when he noted that his bank would have to do a considerable amount of hand-holding.

“In order for us to add value to our customer base, we have to add value in an environment that has the standards that we would expect from safety and soundness,” he said.

Takeaway

It is clear that Bitcoin is on the rise. Part of that has to do with its role as a hedge against inflation. The fact that investors are turning to it as gold falters in that role is extremely interesting in and of itself. 

It seems to vindicate prior notions of Bitcoin as gold. 

Equally as interesting is who is behind the shift. It’s institutional investors who are normally very conservative. They want a hedge against inflation. If Bitcoin can act as such a tool, then they’ll continue to raise demand for it. That is a sea change as well. 

If prices continue to rise and more traditional investors realize Bitcoin as the new gold, then don’t be surprised when it tests new highs in price.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

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Precious Metals

Moscow Exchange extends the trading hours of Equity Market

Earlier this year, Moscow Exchange has been extending trading hours for market participants. Since March, MOEX’s FX, Precious Metals and…
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Earlier this year, Moscow Exchange has been extending trading hours for market participants. Since March, MOEX’s FX, Precious Metals and Derivatives Markets opened at 7am and closed at 23:50 Moscow time. The exchange made available after-hours trading on Bond Market in September.

Clients of the exchange are able to test the morning hours on their trading systems from 13 October.

In order to make pricing on FX Market more effective, Moscow Exchange will hold opening auction from 6:50am to 7:00am for all spot instruments from 6 December 2021. This aims to generate a more representative opening price and reduce the risk of artificially inflating or undervaluing the market price. The Equity & Bond Market has opening auctioning placed since 2015.

Last month, the Russian market maker expanded the direct market access to use OTC services on MOEX’s FX and Precious Metals Markets. The exchange launched Linking with Foreign Liquidity Providers using NTPro platform technology.

The post Moscow Exchange extends the trading hours of Equity Market appeared first on LeapRate.

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Economics

What is Stagflation and How Will It Affect the Global Recovery?

According to the National Bank of Canada the risk of global stagflation is surfacing due to rising oil prices, soaring food costs, and slow economic growth…

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According to…[the] National Bank of Canada…the risk of global stagflation is surfacing due to rising oil prices, soaring food costs, and slow economic growth…[which] threatens to undermine the global recovery. 

What is Stagflation?

Stagflation is high inflation during a recession, when it typically shouldn’t be seen.

  • In a healthy scenario, inflation is the result of rising productivity and a tight job market. It’s viewed as a side effect of too much success.
  • During stagflation, inflation rises with high unemployment and slow growth. It’s often the result of lower confidence in a currency. Rising inflation for essential goods means diverting spending from other areas of spending. Diverted cash diverts revenues for certain companies, which can further slow growth.

Early Signs Of Stagflation Have Begun To Appear

One of the most well-known periods of global stagflation was the early 1970s. Oil trade restrictions resulted in rising energy costs, which trickled into most goods. This made already elevated inflation even worse, especially for food. Since this was during a recession, it exacerbated the difficulty of unemployment…

The National Bank sees some signs of stagflation beginning to appear in the economy. Like in the 1970s, it’s starting with a shock to energy prices due to a shortage, and rising carbon permit costs in OECD countries and this can slow global trade. in addition, the pandemic recession is still raging on, with elevated unemployment…

Rising Global Food Prices May Slow Global Economic Growth

Global food prices are rising at an unusually fast rate these days, and it’s not a base effect. The United Nations Food Price Index shows the basket price of food is up 30% year to date, from it’s 2020 average…[which is] the highest level of growth since the 1970s…

…Food is one of the largest components of household expenses in emerging economies (about 60% of global GDP)…[and,] as food prices rise, capital will be diverted into essentials… killing emerging market consumption…[which] will drag global trade. “Clouds are forming over global economic growth forecasts for 2022,” concludes the National Bank of Canada.
Editor’s Note:  The original post by Daniel Wong has been edited ([ ]) and abridged (…) above for the sake of clarity and brevity to ensure a fast and easy read.  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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