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Roll on up, for my price is down

09/19/2022
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  • metals
  • gold
  • indices
  • inflation
News list

S&P 500, Dow Jones Industrial Average, Nasdaq 100

It was the statistics of US inflation that shaped the global markets past week. Everybody was expecting big news from U.S. Bureau of Labor Statistics, and it did not let us all down: announced on Tuesday, September 13, fresh market data shook and shocked investors globally.

The Consumer Price Index (CPI) in August year-over-year showed a staggering growth by 8,3% against the forecast of 8,1%. The monthly inflation, meanwhile, demonstrated the numbers twice as big as expected: 0,6% instead of 0,3%. Just a reminder: it is the first largest economy on Earth (for now) and even the change of such crucial numbers by one tenth makes a stunning impact on the market mood.

And so it crashed this time too: key market performance indicators, like S&P 500, Dow Jones Industrial Average, Nasdaq 100 had, as media calls it, the series of worst trading sessions since COVID-19 collapse in 2020. The slope continued the next day, making the total losses up to 10% with each of three indices. So, all the achievements of the successful summer sessions went down to naught, and it turns out that those analyst calling it the ‘dead cat bounce’ were somewhat right and even sharper decline lies ahead.

S&P 500, Dow Jones Industrial Average, Nasdaq 100

Gold Future(s)

One of the explanations of the abovementioned selloff is the total market confidence in the end of the years of cheap money. In view of historically peaking inflation, Federal Reserve has no other choice but rise the exchange rate again and again on next consecutive meetings. It works like this: the higher is the rate, the less dollars are in circulation, the more expensive is the USD.

And the more expensive USD is, the cheaper is the all-time equivalents of value, like gold. The ounce of the precious metal easily crashed ‘psychological level’ of 1700 USD from the above and even touched the 1670 level a couple of times. Considering the eagerness of President Joe Biden’s administration to beat the inflation as one of its pre-elections achievements, there remains no doubt that new rises of the key rate can be overseen in the nearest future, and hence – cheaper gold.

Gold Future(s)

Mining Companies’ Stocks

Few metals remain, however, which price forecasts cause no worries, and we are talking here about rare-earth metals – those in the periodic table of the chemical elements with names as fancy as unclear: how do you like praseodymium or europium, to take but a few?

Meanwhile, it was rare-earth metals issues in the core of the global agenda past week. These were called a strategic necessity by an official none other than Ursula Gertrud von der Leyen, the president of the European Commission, herself. The president said that the creation of a European Raw Materials Alliance late last year was made for this purpose, so as to alleviate the bloc’s reliance on extractive practices and to circulate critical material among member states.

Indeed, the dissolution of long-established supply chains in view of new threats present and coming puts the choice as simple as this: you either build a safe pile of stocks now or find yourself unable to build whatever high-tech gadget in the future. As von der Leyen puts it, the EU’s demand for rare-earth metals will grow five times to 2030. Which means, that this is the right time to grab the CFD-s on mining companies like Norilsk Nickel, PJSC, that are available for trading with LH-Crypto broker. Otherwise, stocks of these companies may become even more rare, than metals they extract.

Mining Companies’ Stocks

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