It seems the world’s markets have been at a standstill in recent weeks, unsure of how to proceed until the Obama administration and congress are able to find a resolution to the current debt standoff. The minor metal markets have been no different. Yet, unlike financial markets, which seem to be more conscious of the global economy’s precarious situation, many minor metal prices remain near historically high levels. Most rare earths are still trading close to historical peaks. Antimony is again selling for above US$ 14,000 per tonne, well above its five- and ten-year average. And the prices of indium, germanium and gallium, despite some recent declines, are still close to their highest points since the financial crisis three years ago. So why aren’t the minor metal markets worried about the current global economic situation? Are these markets unfazed by the financial issues in the US, the sovereign debt problems plaguing the EU or the inability of China to resolve its own inflationary pressures?
It may, in fact, be exactly because of these issues that minor metal prices remain high. The global financial woes have all led to one thing: disillusionment with fiat currencies (read: paper money). Considering the prevalent threat of depreciation that looms over the Dollar and the Euro, and the threat of inflation for companies in Mainland China holding Renminbi, it appears that many are choosing to hold their capital in hard currency; metals, that is. This extra demand has been keeping metal prices higher than what they may otherwise be in such an uncertain economic climate. Another interesting consideration is that the demand may not be so much a factor of investors pushing money into these commodities, but companies who see metals as a more reliable store of wealth than cash. And, while the traditional safe-haven for individual investors – gold – continues to rally, prices for certain metals will likely continue to be boosted by the lack of confidence in the world’s major currencies.
