The Precious Metals Week in Review – November 13th, 2020

1. It has been a chaotic week. On Monday, Pfizer’s news of a highly effective coronavirus vaccine boosted risk appetites and the stock market. Meanwhile, daily numbers of new COVID-19 cases have established several records, while hospitalizations continue to increase and set new highs. Federal Reserve Chair Jerome Powell warned that although progress with the vaccine is encouraging, it is still too early to know if it will translate into an economic recovery, particularly in the short term. Similarly, health experts have highlighted that it will take a while to make the vaccine available to the public since key questions around production and distribution remain unanswered.

2. For the week ending on November 7, the seasonally adjusted number of Americans filing for unemployment diminished vis-à-vis the previous week’s revised level. The number of initial claims totaled 709,000, a decrease of 48,000 from 757,000. The revision of this figure for the week ending on October 31 added 6,000 claims, for a total of 757,000. The four-week moving average for the week of November 7 was 755,250, a decrease of 33,250 claims from the preceding week’s revised average. The revision of this average for the week ending October 31 added 1,500 more jobless claims than estimated for a new total of 788,500 claims. Economists interviewed by Bloomberg expected 731,000 unadjusted claims, instead of the lower figure of 709,000. This reading leaves economists feeling more hopeful than last week. This is the fourth consecutive week this figure declines, and the numbers suggest that—contrary to what the previous week’s report led to believe—recovery is not weakening.

3. Federal Reserve Chair Jerome Powell expressed concerns about the economy’s future during an event organized by the European Central Bank on Thursday. In a discussion with European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey, Powell said, “We’re not going back to the same economy […] We’re recovering, but to a different economy and it will be one that is more leveraged to technology, and I worry that it’s going to make it even more difficult than it was for many workers.” He expressed particular concern for the women and minorities, who are usually “low-paid public-facing workers who are bearing this brunt,” and who will face more challenges adapting to the post-pandemic economy. Powell described the post-pandemic economy as one where “you’ll see more telework, you’ll see probably the acceleration of automation. All of that was in the process of happening, but you’re going to see much more of it.” Therefore, he highlighted the importance of support for unemployed and vulnerable sectors who will find themselves having a more challenging time finding jobs and making ends meet.

4. On Monday, Pfizer and BioNTech announced their COVID-19 vaccine is more than 90% effective. The pharmaceutical estimates that it will have produced enough doses of the vaccine to inoculate between 15 to 20 million people by the end of the year. However, the good news has been met with caution among health experts and pharmaceuticals. Despite the stunning levels of efficacy, the durability remains unknown, and worldwide immunization will require the development of more vaccines from other companies. Concerns of a more practical order have also been raised. The ultra-cold storage requirement for the vaccine—below -94 Fahrenheit or -70 Celsius—is a hindrance, even for the most advanced hospitals in the U.S. According to Amesh Adalja, senior scholar at Johns Hopkins Center for Health Security explained that “This will be a challenge in all settings because hospitals even in big cities do not have storage facilities for a vaccine at that ultra-low temperature.” Maintaining the cold chain during transportation will likely become another hurdle, not to mention making the vaccine available in rural areas and developing countries.

5. Since November 4, the U.S. has been announcing more than 100,000 new COVID-19 infections per day. On Thursday, for the seventh time in the past nine days, COVID-19 cases surpassed 153,000 and established a new record; similarly, the number of COVID-19 hospitalizations is now at a record-breaking level of 67,000. According to The COVID Tracking Project, 22 states are seeing the highest levels of COVID-19 hospitalizations, and cases are rising in 47 states. Thus far, more than 234,000 people have died from the coronavirus in the U.S., and the CDC deems that number could reach 282,000 by December 5. Despite the rising numbers, governors and other elected officials seem reluctant to impose strict measures comparable to those seen earlier in the spring. Officials cite fatigue, lack of support from Washington, economic damage to struggling businesses, and politicization of the restrictions. Republican Mississippi Governor Tate Reeves has already announced he will not impose a statewide shutdown. Similarly, Democrat Montana Governor Steve Bullock said he is skeptical of imposing statewide restrictions unless the federal government issues a relief package for the unemployed and small businesses.

6. COVID-19 still roams the White House. Since the Election Night party celebrated in the White House, several attendees have confirmed testing positive. White House Chief of Staff Mark Meadows, Housing and Urban Development Secretary Ben Carson, current and former Trump campaign advisers Corey Lewandowski and Healy Baumgardner, and the head of Trump’s legal challenges team, David Bossie, are among them; some sources add White House political director Brian Jack to that list. Additionally, more than 130 Secret Service officers, in charge of protecting the White House and the President during his trips, have been ordered to isolate or quarantine because of positive results or exposure to the virus. It is believed that the contagion among Secret Service staff is related to President Trump’s rallies held the weeks before Election Day.

7. Quebec and Ontario, the two largest Canadian provinces, are discussing whether to extend the winter school break or not. Both provinces are currently setting records for new COVID-19 infections. In Quebec, authorities estimate that 20% of the new cases recorded in the past two weeks are related to schools. In the meantime, Ontario continues to register high numbers of daily cases; on Thursday, the province logged 1,575 new infections, exposing students and staff. Provincial governments have expressed reluctance to closing schools for the developmental and psychological well-being of students. Quebec’s situation is particularly worrying as “La Belle Province” adopted one of the most restrictive sets of measures in the country starting October. On Friday, Prime Minister Justin Trudeau urged governors to impose stricter restrictions: “Provinces need to make the right decisions around bringing in rules that will limit close contacts, limit the spread of COVID-19.” This is the second time this week Trudeau calls for more measures; cases have averaged 4,300 per day this past week, and by December, the entire country could register more than 10,000 infections daily. “What we do in the coming days and weeks will determine what we get to do at Christmas,” Trudeau added.

8. After almost two weeks of vote counting, Edison Research finally called Georgia for President-elect Joe Biden and North Carolina for President Trump. This ends the tallying at 306 electoral votes for Biden and 232 for Trump. To this day, President Trump continues to refuse conceding victory, and the lawsuits seem to be falling apart. The law firm that filed the lawsuit in Pennsylvania for the Trump campaign to eliminate the mail-in votes withdrew from the case. In Arizona, the Trump campaign dropped the lawsuit it filed, and it is now requesting a recount of the ballots that the machines identified as overvotes. And in Michigan, a judge declined the request to halt the certification of Biden’s win in the Detroit area. Republican Senators of Kentucky and South Carolina Mitch McConnell and Lindsey Graham, among others, supported Trump early this week in his refusal to concede victory. However, more members of the Grand Old Party recognize Biden’s win and are voicing their concerns over Trump’s decision to deny President-elect Biden access to daily intelligence briefings. Republican Ohio Governor Mike DeWine acknowledged Biden is the new President, and Iowa Congressman Chuck Grassley—the longest-serving Republican in the Senate—said to CNN that Biden should have access to classified briefings. Later in the week, Senator Lindsey Graham agreed with Grassley, and so did Oklahoma Senator James Lankford. Some have interpreted these statements as de facto acknowledgments of Biden’s victory.

9. OPEC’s latest monthly report revealed the coalition’s new demand outlook for crude oil for 2020 and 2021. OPEC reduced its demand outlook by 0.3 million for both years, leaving daily demand for this year at 90 million barrels and 96.3 million barrels for 2021. In past reports, OPEC announced it expected global consumption to drop this year to its lowest levels since 2013. Pfizer’s news about the high effectivity levels of its vaccine reflected on crude oil prices. Both Brent and West Texas Intermediate crude oil surpassed the $40-dollar threshold this week and reached the high of the week on Wednesday. Brent oil closed the week at $42.78, and WTI crude settled at $40.13.

10- Both the euro and the Japanese yen spent the week in negative territory against the U.S. dollar. The euro debuted this week with a slight increase, followed by a sudden surge that took the currency to the week’s high on Monday afternoon. However, the drop to negative territory was even more sudden. The European currency made several attempts to recover from the late afternoon until Tuesday morning when the euro fell even lower. Late Tuesday morning, the currency was climbing its way up again, but by Wednesday morning, it was down once more to the low of the week. In the afternoon, the euro started another ascent that gave way to a small dive. However, by the morning of Thursday, the European currency initiated a slow climb that became an upward trend; the euro closed the week to the upside against the greenback. Like the euro, the Japanese yen started the week with an uptick—the week’s high, followed by a slow drop into negative territory close to midnight on Sunday. The descent accelerated and took the yen close to the week’s low. By the early evening of Monday, the yen started to climb in an attempt to recover; however, it crested by the wee hours of Tuesday and fell again. The Japanese currency had another ascent and descent between Tuesday and Wednesday afternoon that led the currency to the week’s low. From there on, the yen started a slow-moving upward trend, and it closed the week to the downside against the greenback.

President Trump and Republican politicians are not the only ones refusing to acknowledge President-elect Biden’s victory. China was part of the list of countries that had not congratulated Biden for his win, along with Russia, Brazil, Turkey, North Korea, and Mexico. However, the Chinese Foreign Ministry broke silence today; the spokesperson for the said ministry said today that they “respect the American people’s choice” and added that they “congratulate Mr. Biden and Ms. Harris.” Prior to today’s statement, the Chinese Foreign Ministry had only “noted” Biden’s assertion of victory. Some analysts interpreted the gesture as a precautionary in view of Trump’s refusal to admit defeat, while others attributed it to the rigidity of the government’s decision-making process. Despite the diplomatic gesture, tensions continue to grow between the U.S. and China. The Chinese government used this week’s distractions to annihilate Hong Kong’s legislature; meanwhile, the White House issued an executive order that banned the U.S. to invest in about 30 Chinese businesses because of purported ties with the Chinese Military Forces.

On Wednesday, the European Union agreed to buy 300 million doses of the coronavirus vaccine produced by Pfizer and BioNTech. The European Commission has struck similar deals with three other pharmaceutical companies so that members of the European Union can access about one billion doses of experimental coronavirus vaccines. Access to the vaccine would be granted at the same time to all 27 members of the European Union, and vaccination campaigns are already in the works. The head of the E.U.’s health agency said on Wednesday that vaccinations will tentatively start early next year. Trial results for the AstraZeneca-Oxford University’s coronavirus vaccine are due in the next few weeks. On a similar note, Russian scientists announced their vaccine “Sputnik V” had a 92% success rate; however, the results of the vaccine trials have not been subject to external reviewers.

Associated Press reported on Friday that 24 CEOs of Fortune 500 companies held a videoconference three days after the elections to discuss courses of action, in case Trump refused to leave the White House. The CEOs agreed that, if Trump refused to leave office peacefully, they would issue statements and go as far as to put pressure on state Republican Congresspeople if they tried to redirect Electoral-College votes to Trump. The New York Times reported that President Trump consulted that idea with his advisers on Wednesday. People briefed on the discussion said the President asked if Republican legislatures could choose Trump electors in some states to grant him the votes needed to have a second term in office. They also noted it was not a detailed nor a serious conversation.

This week’s positive news encouraged investors to welcome risk again and ditch safe-haven investments. However, as experts have warned, the pandemic is far from over, and the harmful effects of new relief packages on the value of money still loom large. Therefore, savvy investors continue to regard gold and silver as shields to protect their capital and diversify their portfolios. Nevertheless, precious metals should always be viewed as a long-term investment; the key to profitability through the ownership of physical precious metals is to acquire the physical product and hold on to it for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long run.

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Precious Metals International, Ltd.

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