At the beginning of 2018, the United States began placing tariffs on Chinese imports in retaliation for their unfair business practices, which have included government subsidized industries and intellectual property theft. China immediately retaliated, and a trade war between the two countries has begun. Throughout the year, tariffs have increased and as the U.S. and China have become further embattled in a trade war, metal prices, both base and precious are at an all-time low, Matt Badiali warns. Although fears of a large U.S economic impact have not come to fruition, certain commodities, particularly metal and some agricultural goods have been affected.
However, the tariffs enacted by both governments have diminished Chinese imports and have weakened the Chinese economy, Matt Badiali has noted, pointing to the low performance of the Shanghai Composite Index and the value of the Chinese Yuan. Conversely, the United States is enjoying the effects of a strong dollar and booming economy. A strong U.S dollar impedes the value of precious metals. Most investors chose to rely on the value of their currency while the dollar is robust, glutting the market with an excess supply of precious metals, particularly gold.
While platinum and silver both have industrial uses, particularly in automotive manufacturing and in electronics, the slowdown of Chinese manufacturing has lessened the demand for industrial uses of those metals, particularly within the solar panel and electronic exports. Matt Badiali blames these factors for the depressed value of precious metals and the lack of interest in metal investing. Although investments in industrially used metals, including the precious metals platinum and silver, can still be a viable option, Matt Badiali thinks there are other commodity markets in a better position for wealth gains. Noting to the rises in Brent Crude and the booming hemp market, the opportunity to take strategic advantage of these commodities is better. Source of the article : http://www.talkmarkets.com/member/Matt-Badiali/