There is no doubt that the Covid-19 epidemic has had a chilling effect on economies across the world. As you might expect, the markets for raw and finished metals are no exception. Precious metals as a whole took a serious dive in March, and some of them have yet to recover. Still, it’s a different story for each one, so let’s talk a little bit about this subject in greater detail. We will be limiting ourselves to the most valuable metals since those have the greatest effect on the market in general.
Gold
Whenever a crisis looms, you can bet that people will be hoarding gold. Indeed, that is not an unwise decision. Gold is one of the few things that is guaranteed to remain valuable, regardless of what the future may hold. Thus, it is not surprising that the gold price saw some serious gains at the beginning of the pandemic.
Unfortunately, these gains do not seem to have held. As of this writing (May 18, 2020), the latest news indicates that gold prices have fallen sharply. This drop seems to be severe enough to wipe out most of that panic-buying bonanza.
Now that most of the panic buyers have finished stocking their hoards, it is natural that the price of gold would go down a little bit. A lot of people simply aren’t buying because they already bought as much as they can. However, gold is a very useful metal, even when you discount its pure commodity value. It is used for various electronics, including those that are essential for modern life. As such, there is no reason to believe that the price of gold will spiral into any sort of problematic situation.
Silver
While gold has seen some trouble lately, silver has seen even more. Back in early March, the price of silver hit an 11-year low, which was a bad sign to all involved. Thankfully, prices seem to have recovered somewhat but are still well below the norm. On the upside, there is reason to believe the price of silver will continue to recover. Like gold, silver is a commodity with near-universal value.
The huge downturns that we have seen in regards to the price of silver are largely due to large-scale mine shutdowns in the wake of the pandemic crisis. As governments lock down various places and sectors of the population, the miners of precious metals were not spared. These lockdowns show no sign of ending in many places, though others have begun to ease their restrictions and return to normal life.
In spite of these recent downturns, silver is still not a bad investment to make. There is no real reason to believe that the Covid-19 epidemic will continue to impact the market over the long term. Before long, the companies that run these mines (and the governments that regulate them) will find that they have no choice but to try and return to some degree of normalcy. In general, the price of silver has normally been more stable than the price of gold, and that makes it a great thing to invest in during a crisis.
Platinum
Platinum, not surprisingly, has also suffered some degradation in its price. However, it might surprise you to know that these losses have not been all that significant. In March, at the same time that gold and silver began to falter, platinum demand fell by about 5%. During the same period, the supply of platinum decreased by about 19%. According to the latest news, this short decline was caused by a major mine accident in South Africa and was unrelated to the Covid-19 virus.
The demand for platinum is mostly driven by the automotive industry, and that might be why it hasn’t suffered so much as the others. All cars are required by U.S. law (and the laws of many other countries) to have a catalytic converter. This is an emissions control device that helps to nullify some of the air pollution caused by car exhaust. Because these devices use platinum as a component, the demand remains relatively high. Despite some damage to the automotive industry, the demand for good transportation will never go away.
Of course, this short review only covers the three most valuable metals, so feel free to do some additional research if you would like to know more. Steel, copper, and aluminum are just as important to the economy, but that is a subject for another time. We hope that you have enjoyed this article and that it will be helpful to you in some way.
