The Precious Metals Week in Review – March 12th, 2021

1. Reopening efforts continued this week as New York City and New Jersey increased indoor dining capacity to 50%, starting March 19. Connecticut and Pennsylvania businesses in the retail food industry have been operating with this capacity limit for some time now. Maryland joined the group on Tuesday with a surprise order allowing churches, gyms, bars, and restaurants to reopen at full capacity starting Friday. The order also authorized theaters, banquet halls, and stadiums to operate at 50%; nevertheless, the state mask mandate remains in effect. Canada is already seeing the economic impact of fewer restrictions. On Friday, Statistics Canada reported a decrease of 1.2% in the unemployment rate in its latest release of the Labor Force Survey. This week also saw the coronavirus relief bill’s enacting as President Biden signed it into law on Thursday.

2. For the week ending on March 6, the seasonally adjusted number of Americans filing for unemployment declined vis-à-vis the previous week’s revised level. The number of estimated initial claims totaled 712,000, a decrease of 42,000 from 754,000. The revised figure for the week ending on February 27 rose by 9,000 claims, from 745,000 to 754,000. Meanwhile, the four-week moving average for the week ending March 6 was 759,000, a decrease of 34,000 claims from the preceding week’s revised average. This figure’s revision for the week ending February 27 rose by 2,250, totaling 793,000 claims. The number of Americans who cannot claim unemployment benefits, such as freelancers and gig workers, and who applied for Pandemic Unemployment Assistance increased for the week closing on March 6. This unadjusted figure grew by more than 41,863 applications, from 436,138 in the week ending February 27 to 478,001 by March 6.

3. February’s Canada Labor Force Survey greatly surpassed economists’ expectations. According to Statistics Canada, the economy added 259,000 jobs in the second month of the year, compared to analysts’ projections of 75,000 jobs. The unemployment rate decreased to 8.2% from 9.4%, exceeding the hopes of experts by 1%. This jump in employment is the biggest increase since September of last year and resulted from the easing of restrictions in early February; conversely, the 1.2% decrease in unemployment sent the unemployment rate to the lowest level since March of 2020. Québec added the most jobs with 112,600 positions, followed by Ontario with 100,300, British Columbia (27,000), Alberta (17,000), and Manitoba (16,000); most of these job gains happened in the private sector. The industries that contributed with the most posts were retail trade with 122,000 positions and the accommodation and food services industry with 65,000 jobs. Certain areas reported higher employment levels than in pre-pandemic times; the professional, scientific, and technical services sector increased by 5.6% compared to last year, education rose by 3.7%, and public administration grew by 3.4%. Despite the progress made, the Canadian economy continues in a critical condition. Young women have borne the brunt of the pandemic: year-over-year, job losses among this population almost double that of young men—14.1% v 7.3%. Although the number of part-time jobs (171,000) almost doubled the number of full-time jobs (88,000), nearly a quarter of the part-time workers expressed wanting full-time employment—an increase of 5.3% compared to this time last year. The number of self-employed workers remained unchanged for the second consecutive month.

4. On Thursday night, President Biden delivered a speech, marking the first anniversary of the World Health Organization’s pandemic declaration. In his address, Biden announced his plan of making all American adults eligible for vaccines by May 1 and his hope of celebrating Independence Day as close to normal as possible. The speech came a day after the U.S. House of Representatives passed the Senate-approved coronavirus stimulus bill, thus clearing the way for Biden’s signature on Thursday. The bill marks President Biden’s first legislative victory, although the lack of support from Republican lawmakers tainted it. On Friday afternoon, the President celebrated the signature of the bill with a speech on the Rose Garden in which he acknowledged the work of Democrat lawmakers. The law contemplates direct payments of $1,400 to Americans, an extension of unemployment benefits, and funding for schools. Despite the lack of Republican support, polls estimate that 70% of American adults support the legislation, and 41% of Republicans and Republican-leaning Americans favor it.

5. This week has been eventful on the vaccine career front. On Thursday, Denmark, Iceland, and Norway suspended the use of the AstraZeneca COVID-19 jab after a Danish woman developed a blood clot and died after receiving the vaccine. Although the European Medicines Agency, the European drug regulator, said there is “no indication” that the vaccine causes blood clots, other countries have opted to discard the doses from the same batch following several severe clotting cases. On Friday, Bulgaria and Thailand also interrupted the use of the immunization. While the U.S. government awaits the AstraZeneca vaccine trial results, tens of millions of doses of the vaccine remain unused at the pharmaceutical’s production facilities in the U.S. As reported by The New York Times, AstraZeneca has failed to meet deadlines in Europe, and thus, has asked in conjunction with European leaders for access to the jabs to keep the vaccination campaign from coming to a standstill. Federal officials have also mentioned the possibility of sending doses to Brazil, where infections and deaths are reaching new heights. For now, the U.S. has declined the European request, although its decision could change. Sources say that the Biden administration turned down the demand because of current vaccine supply uncertainties.

6. On Thursday, Maryland-based Novavax stated that its COVID-19 vaccine had an efficacy of 96.4% in its Phase 3 trial in Britain but reported a 48.6% efficacy on its Phase 2 trial in South Africa. While the former figure puts the inoculation at par with Pfizer’s and Moderna’s vaccine, the latter has raised concerns among scientists as it reflects the reduced effectivity of jabs against the new coronavirus variants. The South African results are consistent with the British in one aspect: the vaccine’s efficacity lessens to 86.3% when tested against the British variant. Regardless of efficacity levels, both trials showed that the jab still protects 100% against death and severe disease. Although Novavax has yet to put its first vaccine ever on the market, it has received support from the American government to develop the jab and has managed to run trials in Britain, Mexico, South Africa, and the U.S. On a different note, the Center for Disease and Control Prevention, C.D.C., said on Friday that the U.S. has put 100 million doses in the arms of Americans. Thus far, 10% of the population has been fully vaccinated, and about one-fifth of Americans have received the first dose.

7. The week started with a surge in Brent crude oil prices above the $70 threshold after Saudi Arabia declared that missiles had targeted its oil facilities on Sunday. Brent crude reached $71.38 on Monday’s trading—the highest level since January of 2020—but soon retreated. Both crude oil benchmarks fell until Tuesday, regained ground for the next two days, and fell again during Friday’s session. On Thursday, the OPEC published its monthly report in which the Organization reduced its demand forecast for the next two quarters. Analysts expressed concerns over the effects of the production cuts that OPEC and allies, known as OPEC+, adopted to counter the price fall. Experts worry that the measure might send prices too high and accelerate the adoption of alternative energy sources. Oil prices seemed to respond to the OPEC’s forecast adjustment with a fall; Brent crude settled at $69.23, and West Texas Intermediate closed the week at $65.56.

8. On Sunday night, the euro inched higher against the U.S. dollar right after opening and dived to negative territory, reaching the week’s low in the wee hours of Tuesday. The European currency managed to reverse course and climb for the remainder of the morning; however, it could not sustain the ascent and lost ground until Wednesday’s early morning. Next, the euro rose, entered positive territory, and reached the week’s high on Thursday evening. On Friday, the European currency fell sharply and bordered negative turf. The euro closed the week to the upside against the greenback despite the descent. In contrast, The Japanese yen had a week marked by sharp ascents and falls against the U.S. dollar. The currency touched the week’s high right after the session opened on Sunday, and by the early morning of Monday, it initiated a sharp plunge that took it to the week’s low in the early hours of Tuesday. The yen managed to reverse course abruptly but could not sustain the climb for long. For the remainder of the week, the currency followed a sharp ascent-descent pattern, bordering positive turf when peaking. However, by Thursday evening, the pattern changed with a steep drop that extended until Friday morning. On the last session, the currency unsuccessfully attempted several recoveries and closed the week to the downside against the greenback

On Tuesday, the U.S. and Indian governments announced that the leaders of Australia, India, Japan, and the United States would convene virtually on Friday for the first meeting of the Quadrilateral Security Dialogue, or Quad for short. The group first came together in 2007 and assembled sporadically after its formal creation; nevertheless, it took ten years for it to come back in earnest, under the Trump administration, as Chinese power grew in the region. Three years ago, China dismissed the Quad and likened it to “seafoam in the Pacific” with “short-lived ideas.” Today’s meeting showed the opposite as the Quad delivered concrete agreements. In its first joint statement, the Quad pledged to “respond to the economic and health impacts of COVID-19, combat climate change, and address shared challenges, including in cyberspace, critical technologies, counterterrorism, quality infrastructure investment, and humanitarian-assistance and disaster-relief as well as maritime domains.” In their first accord, Quad members tackled their top concern and committed to delivering up to 1 billion doses of the jab, by 2022, to the Association of Southeast Asian Nations (ASEAN), using India’s manufacturing capacity. Despite attempts to present the association as more than an anti-Beijing alliance, analysts point to China as the primary concern, and official statements seem to have an anti-Chinese undertone. On Thursday, State Department spokesman Ned Price said that the Quad “was established not to counter one single threat or to focus on one single issue, but it was really established, […] to showcase what democracies can deliver together both for our own populations and for the broader world. […] Of course, maritime security is a key focus of the Quad, but it is a grouping that is predicated on shared interests, […] We have shared interests in standing up for universal values and rights. We have shared economic interests. We have shared security interests.”

The chances of keeping the coronavirus pandemic from becoming endemic continue to decrease each day as wealthy countries continue to make access to COVID-19 vaccines difficult to poorer countries. A five-month-old proposal asking for a temporary waiver on COVID-19 vaccine patents was blocked again during the two-day meeting of the World Trade Organization (W.T.O.) held in Geneva on Wednesday and Thursday. Despite counting with the support of more than 100 countries in the developing world and the backing of European and U.S. parliamentarians, wealthy countries continue to oppose the South Africa-India-led effort. The proposal requests a provisional loosening on patent restrictions for COVID-19 products—vaccines and equipment included—in order to increase production and access to the jabs. Canada, Japan, Switzerland, the U.K., and the U.S. argue that the problem is not intellectual property but manufacturing capacity.

Nevertheless, a letter by the Pharmaceutical Research and Manufacturers of America, PhRMA, addressed to President Biden contradicts this argument. “The proposal marks a significant escalation in anti-I[intellectual] P[roperty] global activism and will further polarize legitimate conversations on countries’ engagement to combat the pandemic,” reads the document. The passage is reminiscent of the losses pharmaceuticals faced 20 years ago when several developing countries waived intellectual property licenses without consent to produce HIV/AIDS drugs, substantially increasing access to medications and lowering their costs. However, the letter goes on to say that eliminating intellectual property protections would, in fact, sabotage the response to the pandemic and hurt the sharing of information and technology key in the expansion of vaccine manufacturing. The W.T.O. will convene again on June 8 and 9 to discuss this topic; alternatives to the waiver could gain traction during the next meeting.

As businesses reopen and the demand for goods and services regains momentum, many investors continue purchasing physical precious metals to shield their portfolios from inflation. Savvy investors continue to see the ownership of physical precious metals as a means to diversifying their portfolios, and thus, as a shield from the uncertainty of bubbly equity markets and potential price increases. Despite the hedge attributes of precious metals, they 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.

Precious Metals International, Ltd.

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