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Precious and industrial metals generally pulled back after some hawkish comments by Fed Governor Michelle Bowman as well as a uptick in consumer confidence to 100.4% and an increase consumer 12- month inflation expectations from 5.3% to 5.4%.

Yet the bigger topic of conversation has been the ability of King Dollar to reign supreme over the global economy.

Record trade deficits the rise of the BRICS countries and talk Saudi Arabia wanting to move away from the Petro dollar has raised concerns that king dollar could soon lose its reign over the global marketplace. These concerns have been enhanced by near record gold buying by central banks and some real moves by China. Russia and Saudi Arabia Convert some of its dollar holdings into gold.

And while there are some real concerns about the Biden administrations reckless spending policies and huge debt levels the reality is that the dollar is probably a lot stronger than people give it credit for and they are reports that the death of King Dollar is greatly exaggerated.

The Atlantic Council put out a report that said the “dollar’s role as the primary global reserve currency is secure in the near and medium term.

“The dollar continues to dominate foreign reserve holdings, trade invoicing, and currency transactions globally. All potential rivals, including the euro, have a limited ability to challenge the dollar in the immediate future.

BRICS members have turned their attention away from a shared currency and toward new cross-border payment systems with the goal of creating a more multipolar financial system. China has led this effort by accelerating its development of the Cross-Border Interbank Payment System (CIPS)—a renminbi settlement mechanism.

 The Atlantic Council says that between June 2023 and May 2024, CIPS added sixty-two direct participants and now comprises 142 direct and 1,394 indirect participants. SWIFT is still by far the dominant player, with more than 11,000 connected banks. Since the direct CIPS participants could clear transactions without relying on SWIFT or the dollar, traditional indicators of renminbi use may be undercounting the actual value.

Negotiations around an intra-BRICS payment system are in the early stages, but the members have reached bilateral and plurilateral agreements with one another, with a focus on cross-border wholesale central bank digital currency (CBDC) and currency swap agreements. These agreements are likely difficult to scale due to regulatory and liquidity issues but may form the basis for a currency exchange platform over time.

In the last quarter of 2023, the share of renminbi in global foreign currency reserves dropped to 2.3% from the peak of 2.8% in 2022, despite Beijing’s active support of renminbi liquidity through swap lines. Reserve managers might be perceiving the renminbi as a geopolitically risky currency because of concerns about China’s economy, Beijing’s position on the Russia-Ukraine war, and increased tensions with the US and G7.

Nearly a third of all central banks plan on increasing their gold reserves in 2024. While the euro was once considered a competitor to the dollar’s international role, it continues to lag far behind and is weakening as an attractive reserve currency. The 2022 sanctions on Russia signaled to reserve managers that the euro exposed them to similar geopolitical risks as the dollar. Those looking to de-risk away from the dollar have turned to gold.”

We all know that there’s probably a major copper shortage ahead but in commodities like comedy timing is everything.

The Wall Street Journal wrote that “ Investors have piled into bets on a looming copper shortage this year. That itself is helping to ease the potential problem—and spoil the party for latecomers.

Copper bulls, who have long touted the metal as an energy-transition play, appeared vindicated a month ago.

On May 20, spot prices on the London Metal Exchange hit a record of around $11,100 a metric ton in intraday trading, up 29% from the beginning of the year. The commodity’s starring role in what might have been the biggest mining deal in history, as industry leader BHP courted its peer Anglo American, only added to a sense that this was copper’s moment.

But the moment passed: BHP never made a firm offer, and the LME spot price is down more than 14% from its peak.

One reason is that the spring run-up in prices was driven by speculators more than by users of copper.

From the start of April to mid-May, copper futures in New York surged by 26.4% as traders and commodity trading advisors, or CTAs—many of which use algorithms to follow market trends—bet on a supply deficit. In London, the long position on the LME grew from around 5,300 lots in January to a high of 71,900 lots in mid-May, according to commodity data provider Fastmarkets (each lot represents 25 metric tons of copper). That put pressure on bearish traders who had sold short, creating a short squeeze.

But the rally also forced some industrial buyers to pull back. Investors have taken profits as hopes of a shortage have cooled somewhat.

But a supply crunch isn’t guaranteed. The closure last year of one of the world’s largest copper mines in Panama after a court ruling has been one problem. If the mine were to reopen early next year, that would tip the market into a surplus of 1.8%, according to Deutsche Bank.

Meanwhile, the supply of copper scrap might exceed expectations. China has ramped up imports of the waste metal, taking in nearly a million metric tons in the first five months of 2024. Trying to map out where that supply comes from, and how much can be recovered, is a Herculean task, as copper scrap is often procured from obscure mom-and-pop shops. For now, though, it is clear that higher prices have made stripping out the metal from unwanted appliances a lucrative endeavor.

High commodity prices have a way of bringing obscure sources of supply to light.

The world will need a lot more copper in its shift to renewable energy but don’t count out the incentives created by high prices. Copper might just be the latest example of a common pattern in commodity markets: The moment investors start to see anything as a sure bet, it unravels according to the Journal.

Platinum is up while gold and silver is down today copper took it on the chin and concerns about a slowing economy after the Fed statements by Michelle Bowman yesterday.

Generally speaking, we still think copper is going to find a good level of support here very shortly and use the weak lens to put on bullish strategies.

Silver long term is still very bullish we’re seeing some extreme wide ranges day traders rejoice

Platinum could increase over gold in the coming days.

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