Since the Fed announced that it would lower interest rates in 2024, the dollar has started to fall significantly. That's because when interest rates go down, the incentive to save money also goes down. So, the market is expecting the dollar to weaken further next year, which is great news for commodities.
Plus, China recently decided to increase its bond purchases by $137 billion, which will help boost the domestic economy. China is the world's largest consumer of commodities, and the electric vehicle revolution and energy transition are also good for certain commodities. In particular, these three commodities are expected to get a boost in 2024.
1.Copper $Copper - main 2403(HGmain)$
Copper is widely used in many industries, including transportation, power generation, and building construction. Therefore, the positive outlook for the global economy is good for copper prices.
Globally, China consumes more copper than any other country in the world. So, the Chinese government's recent decision to increase spending by $137 billion is good for copper prices, as it could drive economic growth in China and lead to a surge in copper demand.
Another catalyst for copper prices is the electrification of transportation, because almost all power lines use copper. Countries are improving their power grids to meet the growing demand for electricity, leading to a lot of copper purchases. In the clean energy sector, solar panels and wind turbines require 5.5 tons and 4.7 tons of copper per megawatt of generating capacity, respectively.
Finally, the average gasoline-powered car, plug-in hybrid car, and electric vehicle use 23 kilograms, 60 kilograms, and 83 kilograms of copper, respectively. So, as the popularity of plug-in hybrid and electric vehicles increases, copper prices should soar.
2.Natural Gas $Natural Gas - main 2402(NGmain)$
According to a recent report from New Scientist, more than 300 million people in the United States and Canada face the possibility of power shortages starting as early as 2024 and lasting until 2028. This could be due to the increasing demand for energy from the tech industry, as well as the electrification of high-rise buildings and vehicles.
The need for new and highly reliable sources of electricity could increase demand for natural gas. Natural gas has the advantage of being cleaner than coal and more reliable than wind and solar energy. In the next few years, many natural gas power plants will be built around the world to meet growing electricity demand.
Meanwhile, Europe may continue to avoid buying natural gas from Russia, forcing them to buy from the United States and Canada instead. As a result, natural gas prices in North America could remain high in the new year, boosting related asset prices.
3.Silver $Silver - main 2403(SImain)$
The price of precious metal silver has climbed about 15% since early October, driven by more than just a weaker dollar. One trend that has been driving silver prices is silver's status as a "safe haven asset."
It's also worth noting that silver is widely used in solar energy, hybrid vehicles, and electric vehicles. In solar panels, silver is used as a "conductor." Each hybrid vehicle requires about 18-34 grams of silver and each pure electric vehicle uses 25-50 grams of silver, much more than the average 15 grams of silver used in gasoline or diesel-powered vehicles.
With the rapid adoption of solar energy and electric vehicles, the demand for silver is likely to surge in 2024, causing the price of silver to soar, making it the most watchable investment among commodities.
If you're interested in investing in silver, you might want to check out this company: $SILVER STORM MINING LTD.(SVRSF)$. Silver Storm Mining used to be Golden Tag Resources Ltd., a Toronto-based mining exploration company that has acquired La Parrilla complex in Durango, Mexico.
La Parrilla complex is a fully licensed complex that includes five underground silver-zinc-lead mines, an open pit mine, and a 2000-ton-per-day processing plant. The company also holds a 100% interest in the San Diego project located in Durango, Mexico.
The San Diego project is Mexico's largest undeveloped silver asset located in the prolific Velardeña mining district. The Velardeña mining district has produced silver, zinc, lead, and gold for over 100 years.
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