Metals have extended their dramatic start to the year, with gold, silver, copper, and tin all hitting record highs as investors flock to commodities as an alternative to traditional assets. This surge has been fuelled by frenzied buying in China across multiple metals, coupled with investors seeking safe havens amid geopolitical tensions ranging from Venezuela to Iran and the U.S. Federal Reserve.
Silver experienced a jump, rising as much as 6.1 per cent to exceed $US92 an ounce for the first time, while gold also reached an all-time peak. Among base metals, tin stood out with a gain of almost 11 per cent at one point, while nickel also surged and copper hit an all-time high.
The rally has been underpinned by the ‘debasement trade,’ where investors shy away from government bonds and currencies due to concerns about increasing debt levels, particularly in precious metals. A relatively weak U.S. dollar makes dollar-denominated commodities more affordable for many buyers. Last year, gold rose 65 per cent, while silver jumped almost 150 per cent, marking each metal’s best annual performance since 1979.
According to Hao Hong, chief investment officer at Lotus Asset Management, the initial movement of gold typically indicates a decline in trust in fiat currencies. Hong notes that since everything is measured against gold, most assets appear undervalued, creating a strong tailwind for commodities, especially metals.
