Financial insights: What do higher copper prices predict?
Global debt rose by $1,300 billion in the first quarter of 2024 to a new record level of $315,000 billion. Moreover, after three consecutive quarters of decline, the global debt-to-GDP ratio started to rise again in the first quarter of 2024. Developing countries’ debt exceeded 105,000 billion dollars in the first quarter of 2024, with the largest increases coming from China, India, and Mexico.
Source: IIF Global Debt Monitor
In 1971, the gold standard was abandoned. Do you notice how this affected the US debt?
Source: Game of Trades
In the last eight years, the percentage has already doubled
US net interest payments, as a percentage of government revenues, are projected to reach 34% by 2054. This means that one-third of all government revenues would be used just to service the national debt. In the last 8 years, the percentage has already doubled to around 15% and is at its highest level in three decades. In the meantime, nominal annual interest payments have, for the first time, exceeded 1000 billion dollars. If the Federal Reserve leaves interest rates unchanged, we could see annual interest charges of 1600 billion dollars by the end of the year.
Source: The Kobeissi Letter, Peter G.Peterson
M2 money supply (including currency in circulation, demand deposits, savings, small-term deposits, and cash deposit accounts), which is important for the liquidity of the markets, is increasing again. Just what is in sight?
Source: Fred
In the US, a rise in unemployment claims is an important signal for the Fed to adjust interest rates.
The decline in German strength
The German business model has historically been based on:
- Cheap energy from Russia
- Cheap subcontractors in Eastern Europe
- Steadily growing exports to China
All three elements are now gone.
Source: MichaelAArouet, Bloomberg
One of the reasons why German industrial production has been declining over the past few years is that Germany has become too expensive compared to its European competitors.
Source: BCA Research
There will be pensions, but what will they be?
“Unfunded” pension entitlements in the main European countries represent between 300% and 500% of GDP. This means that the promises of pensions to be paid in the future are between 3-5 times the current gross domestic product (GDP) of these countries. The downsides of this include financial pressure on the state budget, potential cuts in other public services, and possible increases in taxes or borrowing to cover these liabilities.
When green is not good… Some countries in Europe have a maximum tax rate on income above 50%, including Slovenia.
Source: Trading Economics
The Biden administration plans to raise tariffs on Chinese electric vehicle imports from 25% to 100% as it intensifies efforts ahead of the US elections to protect US industry.
Source: FT
What should I bet on? Silver or the US tech market
The collapse of the “Dot.com” bubble in 2000 led to the Nasdaq losing 95% of its value against silver. Will history repeat itself?
Source: Patrick Karim
The global solar boom is driving a surge in demand for silver.
Source: WSJ
Over the last four years, silver demand has exceeded supply by an average of 190 metric tons. The total deficit over the last 4 years between supply and demand is 760 metric tons.
Source: MrWWolf
What should I bet on? Gold or the US industrial market
The Dow Jones Industrial Average is gold. A downward break in the ratio predicts that gold could outperform the industrial stock market in the coming years.
Source: Gradhhy
Gold = Swiss Franc vs. US Dollar
The Swiss franc has proven stronger than the US dollar in recent years. There is a correlation between the gold price and the CHF/USD ratio. If the Swiss franc continues to rise against the dollar, this movement could be in line with the gold price.
Source: NorthstarCharts
The importance of copper
Are we aware that by 2050, even if we exclude copper consumption in electric vehicles, we will have 2x the demand for copper than the supply? Especially at the expense of the global electricity grid. There should be no years of excess supply over demand during this period.
Source: Twitter
Copper, a key raw material in many industries, is already at an all-time high. This could have a tremendous impact on a renewed inflation cycle and even more expensive products and services.
Source: Barchart