The Precious Metals Week in Review – April 2nd, 2021

1. World commerce took a deep breath at the beginning of this short week as efforts to release the Ever Given from an embankment in the Suez Canal bore fruit. The stream of good news continued on Wednesday and Thursday with Pfizer’s announcements regarding vaccine safety for teenagers and the inoculation’s effectiveness six months after immunization. Nevertheless, the week closed with new restrictions in place and calls for small Easter celebrations. On a different note, President Biden announced a new infrastructure plan on Thursday that could boost this year’s growth by over 6%. Additionally, negotiations with OPEC+ yielded an easing of production quotas, which would lower fuel prices as the world economy tries to recover.

2. For the week ending on March 27, the seasonally adjusted number of Americans filing for unemployment increased vis-à-vis the previous week’s revised level. The estimated number of initial claims totaled 719,000, an increase of 61,000 from 658,000. The revised figure for the week ending on March 20 declined by 26,000 claims, from 684,000 to 658,000. Meanwhile, the four-week moving average for the week ending March 27 reached its lowest at 719,000 in over a year, with a drop of 10,500 claims from the preceding week’s revised average. The revised figure for the week ending March 20 decreased by 6,500 to 729,500 claims. The number of Americans who cannot claim unemployment benefits and who applied for Pandemic Unemployment Assistance decreased for the third consecutive week. This unadjusted figure fell by 4,112 applications, from 241,137 in the week ending March 27 to 237,025 by March 20.

3. On Wednesday, Pfizer-BioNTech said its COVID-19 vaccine was 100% effective on teens ages 12-15. The results emerged after a trial involving 2,260 participants concluded that infections, 18 in total, had only occurred in the placebo group; no cases were reported in the inoculated group. Pfizer announced that it intends to submit the new data to the Food and Drugs Administration, hoping that adolescents in that age group will get the jab before classes start next fall. On Thursday, Pfizer’s roll of good news continued with new trial results. According to a small study of 800 participants, the immunization proved to be 100% effective at preventing illness in South Africa, currently dealing with the B1351 variant of the coronavirus. In its statement, the pharmaceutical also said that trial participants that received the second dose of the vaccine six months ago remain 91% protected against COVID-19.

4. However, not all news on the inoculation front was as positive as Pfizer’s. The long-awaited one-dose Johnson & Johnson jab hit its first obstacle this week. On Wednesday, the pharmaceutical announced that a batch of its COVID-19 vaccine produced by Emergent BioSolutions in Maryland had to be discarded because it did not meet quality standards. The Associated Press retrieved documents where the Food and Drug Administration cites Emergent BioSolutions for issues like cracked vials, mold around one of its plants, and poorly trained staff. The number of compromised doses remains unclear as well as how this snag will affect J&J’s ability to fulfill its delivery plans of 100 million doses by June.

5. On Monday, Canada joined the group of European countries that suspended the use of AstraZeneca’s inoculation. On Monday, the Canadian National Advisory Committee on Immunization (NACI) decided to stop administering the said vaccine to people under 55 years old as a “precautionary measure.” NACI vice-chair Dr. Shelley Deeks cited the “substantial uncertainty about the benefit of providing AstraZeneca COVID-19 vaccine to adults under 55 years of age” given the risk of clotting. On Friday, the European Medicines Agency (EMA) Executive Director, Emer Cooke, said in a press conference that EMA’s investigations showed a possible link between the Astra shot and clotting. Cooke added that EMA’s safety committee will continue to evaluate the evidence and possibly issue updated recommendations in the coming week. At the moment, EMA continues to maintain that there is no evidence supporting the restricted use of the vaccine on any population group. In the meantime, the European Union impatiently awaits export approval from India. The bloc has asked the Indian government to approve the purchase of 10 million doses produced at the Serum Institute of India. Nevertheless, Indian officials think it is not likely as the country struggles to vaccinate its population and has already sent abroad 64 million doses, that is, two million more shots than the number it has administered its people. Sources say that the British government is pressuring the Serum Institute to deliver the second half of a 10-million order it had placed at the Institute even though the facility is supposed to only produce vaccines for middle and low-income countries.

6. On Wednesday, U.S. President Joe Biden announced a $2.3 trillion plan to renew and improve the country’s infrastructure. On Friday, Biden said his proposal was a “once-in-a-generation investment in America […], [and] it’s the largest American jobs investment since World War II. It will create millions […] good-paying jobs.” The ambitious project seeks to compete with China in technology and public investments, but most importantly, it strives to generate jobs as the country opts for greener sources of energy and combats climate change. Biden’s plan includes $621 billion for transportation infrastructure, $100 billion to update the power grid to deliver green-sourced electricity, $111 billion to replace lead water pipes and improve the sewer system, and $100 billion more to expand the access to broadband internet, among other things. The President hopes to increase corporate taxes from 21% to 28% and amass enough income over the next 15 years to finance his ambitious plan. In the coming weeks, he also plans to launch an accompanying proposal of a similar price tag that would focus on domestic programs such as childcare and family tax credits. Senate Republican leader Mitch McConnell reacted on Twitter and said that the plan was a “Trojan horse for far-left demands,” seeking to increase taxes: “If you want to do an infrastructure bill, let’s do an infrastructure bill. Before the pandemic, we had the best economy in 50 years. We should not raise taxes under the guise of an infrastructure bill and send our economy in the wrong direction.” Despite Republican fears, some economists estimate that Biden’s plan could propel growth above 6% this year.

7. On Monday, the world averted another economic catastrophe with the freeing of the Ever Given. Dredgers, tugboats, and excavators worked day-in and day-out for seven days to release the 220,000-ton vessel that had run aground in the Suez Canal. The full moon also had a hand in this feat as the ship finally unstuck when the highest tide struck. Despite the good news, the global supply chains continue strained as the container shortage drags on. Last year, containers shipped to North America and Europe remained stranded in under-staffed ports with almost-closed customs offices due to border restrictions. For every ten containers Asia sent to North America, only four returned to the continent. Congestion in ports and a drop in operating ships added their share to the container shortage. As a consequence, freight charges spiraled from US$1,500 to $6,000-$9,000 per container in February this year. Chinese container manufacturers currently charge $2,500—up from $1,500 before the pandemic—and container rentals have increased 50%. The Chinese government announced measures to increase container production last year. The China Container Industry Association (CCIA) called on manufacturers to dramatically increase their output; according to the CCIA, producers have increased monthly production by 300,000 TEU (Twenty-foot equivalent unit). While some experts predict a normalization in the second half of this year, others remain pessimistic as a new coronavirus wave becomes more apparent and governments impose further restrictions.

8. Brent and West Texas Intermediate crude oils experienced price falls on Tuesday and Wednesday and climbed back up again on Thursday. While Brent oil managed to remain above the $60-mark, WTI closed Wednesday’s session below it. This week’s price fluctuations reflect the concerns of OPEC+’s Joint Technical Committee regarding the new wave of lockdowns. Accordingly, the Committee revised down its forecast and expects consumption growth to increase by 5.6 million barrels per day instead of the initial estimate of 5.9 million. On the bright side, the Biden administration managed to negotiate with OPEC+ a gradual easing of output cuts, effective from May, to keep prices affordable. The two parties agreed that OPEC+ would ease production by 350,000 barrels per day in May, 350,000 more in June, and another 400,000 in July. On Friday’s session, Brent crude gained $1.08 and settled at $64.65, while WTI added $1.81 and closed the week at $61.24.

9. The euro and the Japanese yen spent the week in negative territory against the U.S. dollar. The euro peaked right at opening and touched the week’s high; however, a vertical fall took the currency to negative territory. Despite a steep attempt to recover, the European currency could not reach positive turf nor impede a steady descent that extended until the wee hours of Tuesday. For the remainder of the session, the euro accelerated the fall’s pace through Wednesday’s early morning when it reached the week’s low. A couple of unsuccessful recovery attempts concluded again in descent at the end of the day. Still, the currency managed to reverse course, steadily climb all Friday long, and close the week to the upside against the greenback. The Japanese yen had a similar week; it dipped right at opening and then peaked, reaching the week’s high on Monday morning. The currency managed to stay above the opening level for a few more hours; however, by the afternoon, the yen engaged in a long descent that drove it to the week’s low in the wee hours of Wednesday. The Japanese currency attempted a couple of recoveries on Wednesday afternoon and during Thursday’s session. Despite closing the week in negative territory, the yen closed the week to the upside against the greenback.

A new wave of restrictions is taking over the globe. On Friday, the Canadian province of Québec closed the week by announcing one of the most stringent lockdowns since the beginning of the pandemic. Although provincial government officials said earlier this week the third wave was under control, and despite a recent decline in infections, the Quebec government closed schools and restaurants as victims with the British variant surpass cases with the original strain. Ontario is following suit; the government is expected to announce a provincewide lockdown anytime, effective from Saturday. The measures would be similar to those in place in Toronto and Peel regions. In contrast to Québec, however, Ontario schools are expected to resume in-person teaching after a recess week this month. South of the Canadian border, Michigan struggles with one of the largest and most alarming U.S. outbreaks. The state has seen infections soar from an average of 1,000 daily cases in February to 5,600 in recent weeks. As health officials have warned, the vaccination campaign’s fast progress is making people lower their guard, thus, President Biden’s request to state governments to pause reopening efforts because this is not the time to give up “hard-fought, hard-won gains.”

On Wednesday, new announcements of restrictions took over Western Europe after the French President issued new rules that will go into effect on Saturday. The Gallic country has seen cases rise steeply in the past two weeks, despite government efforts to administer COVID-19 vaccines. In the past 14 days, the daily infections and deaths have increased by 55% and 30%, respectively. President Macron has instituted a curfew from 7 p.m. to 6 a.m., closed schools for the following three weeks, shut non-essential businesses, and urged people to work from home. In neighboring Germany, Chancellor Angela Merkel asked Germans on Thursday to stay home over Easter weekend and avoid all non-essential travel. Berlin’s municipal government announced the first nighttime gathering ban since the beginning of the pandemic, starting Friday, and the city of Hamburg has restricted nighttime outings. In contrast to France and the U.K., Germany has been reluctant to impose strict measures for fear of causing unnecessary damage to the economy and stoking neo-Nazi groups.

As the vaccine rollout gains momentum and the return to a somewhat normal life becomes more imminent, 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.

Friday to Friday Close (New York Closing Prices)

Month End to Month End Close

Previous year Comparisons

Here are your Short Term Support and Resistance Levels for the upcoming week.

This is not a solicitation to purchase or sell.
© 2021, Precious Metals International, Ltd.