November Newsletter: Supply Constraints & Geopolitical Events Create More Price Pressure

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Inflation woes continue to grow with geopolitical news from the Russian invasion of Ukraine and stronger inflation data in the US. The Russian Federation decided to withdraw from the UN-brokered grain deal.

The deal would have allowed hundreds of thousands of grains-produce to reach global destinations. Supply constraints of various kinds have been magnifying inflation pressures worldwide, so this didn’t help the situation. Inflation data for the US was also released higher than expected. The consumer price index (CPI) rose by 8.2 percent YoY compared to a previous reading of 8.3 percent. However, Core CPI rose by 6.6 percent compared to the previous month’s data of 6.3 percent.

Source: TradingView

Precious Metals

Precious metals have achieved a considerably mixed performance through October. The outperformer being platinum which gained 9.50 percent over the past month. Silver managed to close the month in positive territory, up 2.71 percent after dropping nearly 13 percent during the first half of the month.

On the other hand, gold had another subdued month, with the price of the yellow metal sliding south slowly from $1,667 to $1,644 per ounce, for a drop of 1.44%. Gold investors have been greatly concerned about rising interest rates and the latest inflation data hasn’t helped the commodity’s price.

Palladium suffered the worst fate of the precious metals we cover. Palladium hit a recent high at $2,345 per ounce at the beginning of October. It then tumbled to $1,883 by month end, for a loss of 19.7 percent.

The World Gold Council reports that gold demand was stronger in Q3 2022 helped by central banks and consumer buying. Demand for gold in Q3 2022 was 28 percent higher than in Q3 2021, returning to pre-pandemic levels.

To confirm the heavy buying from central banks, Bloomberg goes into more detail. Stating that central banks bought nearly 400 tons of gold over Q3, more than four times the amount for the previous quarter.

Cryptocurrencies

Cryptocurrencies managed to recover some ground lost over the past 6 months with Bitcoin up 5.74 percent and Ethereum up 17.7 percent on the month. As economic woes continue to weigh on consumers’ outlooks, they also begin to garner interest in cryptocurrencies.

A survey by crypto fund Grayscale shows that 25 percent of Americans say that inflation and economic worries are sparking interest in crypto. The survey found that 40 percent of Americans under the age of 45 were more interested in crypto under the ongoing economic climate.

While 15 percent of those aged 45 and older stated they were interested in crypto given the current economic conditions. The survey also found that 80 percent of Democrat voters and 77 percent of Republican voters want more regulation in crypto for both investors and the industry.

Stocks

The broad stock market had a month of recovery from its year-to-date bear trend. All the major indices were up at the end of the month despite higher-than-expected inflation as investors hoped for a Federal Reserve turnaround. The Dow Jones gained 13.6 percent, while the S&P 500 was up 7.5 percent and the Nasdaq up 3 percent.

Wrapping Up

When investing in alternative assets such as precious metals you can take advantage of a tax-enhanced environment with a gold IRA. Specialized companies help you run and manage gold IRAs. You can read our reviews on some of the top gold IRA companies here.

Gino D'Alessio
Gino D'Alessio

Gino D'Alessio is a broker/dealer with over twenty years experience in various OTC markets such as bonds, FX and derivatives. He is currently a financial markets and investments writer & analyst.

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