| | | As the inflation surge continues... metals are being boxed in by rising fuel costs... and the market's expectations re sustaining current supply at current prices are approaching delusional.
I posted about that as background just yesterday, here, and here... and, then, today, gold and silver took off like rockets... only to be clubbed back down like baby seals at the Fed's direction... as seen here.
A big part of that is the ongoing "significant policy error" being committed in the denial that inflation exists... or that it matters... which is being fueled today by the Fed's direct insistence, as shown in the link above, that the banks must sustain the denial... in the form of sustaining the precious metals price suppression. Note they've now given up on the fraudulent "transitory" narrative entirely... and have reverted now to gold and silver prices must be forced to stay low now "because I said so" ?
I've pointed out often that the MOPE narrative lie that QE is inflationary... in spite of there being no overly apparent inflation tied to it after 13 years of QE... is sustainable only because no one is directly hurt by the lack of inflation showing up in the wake of that lie. But that approach will not prove sustainable now... as the lie is reversed... and they falsely claim "we're ending QE, we're raising rates, and there is no inflation." As they force policy compliance with the new false narrative... the reality of there being accelerating inflation in fact... will not allow the lie to be sustained without everyone noticing its a flagrant lie.
That's all apparent today, in the context of the links above, as seen here... in relation to copper : "While tight markets traditionally support base metal prices, investors are now putting more weight on how soaring costs might hurt global growth. On the energy front, dwindling crude stockpiles could signal more reductions ahead for markets." So, were being directed to believe "it's different this time"...and it is not "inflation" but "the natural balance between supply and demand" that is the lie... only because the real inability of producers to deliver greater supply for less money... in the face of growing constraints other than direct costs, along with skyrocketing costs... is inconvenient for the central planners ?
In copper, the market thus thinks, based on unwarranted trust in the lies of the central planners, that, in spite of the still developing issue in the immediate acute shortage, with buyers having already stripped all the physical metal that is available out of the market... the future supply in the pipeline now is considered to be sufficient or in excess out to 2025... when demand from EV's ramps up and puts the market in deficit ?
But, reality is... there is no metal left in the market now... and nothing in sight seems likely to make that change ? Even noting... why would FCX go out of their way to try to produce more, now... when they'll make more money with less risk by insisting on a restoration of better returns on mining investment... by producing a bit more only very reluctantly ? Miners are long since grown tired of getting screwed by Wall Street and their market manipulation and price suppression schemes... and, from here, you should expect to see ALL OF THEM dragging their feet and slowing down production... until the narrative changes to restore balance in "the equal treatment of capital".
That they also forgot to circulate the memo telling everyone the EV revolution has now been postponed until after 2025... is one additional issue to consider ? A somewhat bigger issue near term... still not being considered at all properly... is that with the ongoing and still expanding failure of the centrally planned mercantilist model in trade... the inability to rely on timely delivery of supplies of anything totally destroys the concept of Just In Time supply chain planning. That failure of "efficiency"... which is in fact only a highly predictable realization of an obvious risk being accepted... now requires, at a time when we're already in deep into shortages, that producers must again begin stockpiling parts and materials sufficient to enable predictable control of the flows in feedstocks... as only having stock on hand enables sustaining predictability in future production. That translates directly to a genuinely significant systemic shortage of materials now, as badly depleted stockpiles are in severe deficit now, and that is only the more true relative to the suddenly changed but very real future requirement for holding larger inventories.
Sustaining the costs of the delays that are imposed due to shortages... converts as a time function... into higher opportunity costs driving more inflation... while sustaining the larger (capital and inventory) cost in re-building stockpiles also translates into higher costs over time... not as a cost in an inefficiency... but as a more realistic pricing in of sustainability costs as seen in the physical element of supply on hand as a tool in functional risk management.
The entire global economy is going to become somewhere between 3 to 5 or 10% less "efficient" over the next three to five years... as the ongoing physical failure of mercantilism imposes itself...
It is not the only reversion in "efficiencies" that we are likely to experience in the next few years... as sometimes "efficiency" costs us far more than we gain by tolerating its impositions ?
|
|
