By Mike Gleason, Money Metals Exchange
After knocking on the door of new record highs over the past few weeks, the Gold Futures market is pulling back. Bulls had faced a lot of overhead resistance in futures trading. It finally proved to be too much to overcome -- at least for the near term.
Metals markets may see more choppiness until they find solid technical support levels or get a new catalyst to spark buying. Debt ceiling drama and the potential for more dominos to fall in the banking system could certainly drive price action in precious metals in the days ahead.
Longer term, the fundamentals of tight supplies and rising demand plus unrelenting currency depreciation should drive metals prices higher. Although gold has recently garnered attention for trading above $2,000 per ounce, other metals that are currently being overlooked may deliver bigger percentage gains when they get going on the upside.
One sleeper metal that has lots of potential is platinum. According to a new report from the World Platinum Investment Council, the catalytic metal faces a huge supply deficit this year. Platinum output will decline by 1% even as demand is forecast to surge by 28%.
As a consequence, estimates of platinum's shortfall have been revised upward to 983,000 ounces.
For many years platinum has been out of favor within the automotive industry as automakers opted for palladium in catalytic converters. But that is now changing as platinum benefits from substitution and sees renewed demand in car factories. Meanwhile, other promising new uses for platinum are moving forward, such as hydrogen fuel cell batteries.
Although palladium prices have been cut in half since their peak, platinum still trades at a discount to its sister metal. Platinum also continues to sell for a steep discount to gold.
Historically, platinum has often commanded a premium over both metals. Investors who anticipate that happening again in the future are taking advantage of platinum's low prices today. Although the market for investment-grade platinum bullion isn't as deep or liquid as it is for gold, pure platinum coins and bars are readily available.
In other news, states across the country are moving to block the implementation of a central bank digital currency. Florida governor Ron DeSantis recently signed legislation to prevent a CBDC from being mandated in commerce within the Sunshine State.
DeSantis spoke with veteran journalist John Stossel about the threats posed by a digital dollar.
John Stossel: President Biden and the media are excited that the dollar could go digital.
News Reporter #1: Central bank digital currencies.
News Reporter #2: The world is going to see a functioning CBDC very soon.
John Stossel: A CBDC, that's a national digital currency controlled by the Feds.
News Reporter #2: When you use your wallet to pay for something, the Fed would take the digital cash out of your wallet and deposit it into the merchant's.
John Stossel: I'll read from the President's executive order on responsible development of digital assets. “This will protect consumers, investors, and the environment.”
Gov. Ron DeSantis: That last one's a tell, because I think they would impose certain criteria. You're filling up too much tank of gas. Wait a minute, climate change. You can't be doing that. You bought another firearm? No, no, no.
John Stossel: And if you do buy or do the wrong thing, they can easily cut off your money.
Gov. Ron DeSantis: They want to move to a cashless society, which would basically mean the Federal Reserve and Treasury Department would have supervisory jurisdiction over all of your transactions.
State legislators and governors who want to protect their constituents from central bank digital currency can go a step further by also helping them seek refuge from the unsound monetary policies of the federal government.
State-level sound money legislation includes repealing all sales and income taxes on precious metals transactions and recognizing gold and silver as legal tender. Already this year, several states have passed some form of sound money legislation, with some also moving to establish bullion depositories that will help safeguard state assets and pensions.
With the U.S. government on the brink of default and the banking system being propped up by Fed funny money bailouts, states and individuals who establish sound money reserves of their own can become more resilient to risk.
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Mike Gleason is a Director with Money Metals Exchange, a national precious metals dealer with over 50,000 customers. Gleason is a hard money advocate and a strong proponent of personal liberty, limited government and the Austrian School of Economics. A graduate of the University of Florida, Gleason has extensive experience in management, sales and logistics as well as precious metals investing. He also puts his longtime broadcasting background to good use, hosting a weekly precious metals podcast since 2011, a program listened to by tens of thousands each week.