What does the global energy crisis mean for metal prices? [Video]

It’s official: The world is in the middle of its first ever Global Energy Crisis. In the Seventies, we had an Oil Crisis – but now we have an Oil Crisis, a Natural Gas Crisis, a Coal Crisis and an Electricity Crisis all at once.

The ripple effects are being felt throughout the world – firmly positioning the entire Commodities sector as one of the biggest and most lucrative money making opportunities of the current economic climate that we find ourselves in right now!

As Russia plays hardball with Europe’s gas supply, the continent is staring down a worrisome energy future – and it’s certainly not alone. Since the start of the year, sky-high Commodity prices across the Metals, Energies to Agricultural markets have triggered an unprecedented supply squeeze with economists warning “we haven't seen the worst of it yet”.

Once again, right now, the Commodities markets are being squeezed. This time from two directions – on one hand, demand is booming as economies recover from the coronavirus pandemic. On the other hand, sufficient supplies to meet this demand are being hampered by geopolitical factors.

While demand for energies has skyrocketed, investment in supply has been held back by the move to decarbonize economies. Natural gas prices have been pushed up by on-going geopolitical tensions – sending benchmarks on both sides of the Atlantic blasting through all-time record highs.

Natural Gas prices have soared to 12 times their average for this time of the year and we haven't even entered the winter months yet. Meanwhile, disruptions to supply chains and labor shortages have exacerbated pressure on the balance between supply and demand.

In short, Natural Gas now rivals Oil as the fuel that shapes geopolitics. And there isn’t enough of it to go around. The worsening supply squeeze has already triggered a series of extraordinary ripple effects in the market.

So far this year, 50% of the world’s commodity production from Aluminium, Copper, Cobalt, Nickel, Lithium, Palladium, Platinum, Steel, Uranium and Zinc has already been forced offline due to the huge spike in prices.

Once the colder weather kicks in, this will enviably drive energy prices higher again, making it even more expensive to produce essential commodities the world needs to function and survive – leading to further global production cuts, mining and refinery closures and eye-watering shipping costs – ultimately opening the door to an even bigger squeeze in prices ahead.

In fact, the early signs already look promising.

This week, Silver, which is technically an industrial metal commonly used in solar panels, medical and electrical devices – posted its biggest one-day move since February 2021. Elsewhere Platinum, Palladium and Copper prices surged to multi-year highs. While Uranium prices skyrocketed above $50 a pound – surpassing the record high set in spring, when Russia invaded Ukraine.

Throughout this year, a long list of leading Wall Street banks from Goldman Sachs, JPMorgan to Bank of America have described commodities as their “preferred asset class over the next decade”. In recent days, that chorus has once again become louder with Wall Street's biggest institutions, advising clients to pile back into commodities now – ready for the next big leg higher!

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

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