Gallium Price ($US/KG)
18 August 2024 : Price $889.30
1 January 2024: Price $755.80
Strategic
3 weeks is a long time in markets.
A lot of trading energy and editorial ink has been spent since our last Underneath the Radar went to print. We do not profess to be knowledgeable on the catalysts nor the mechanics of the “Yen Carry Trade unwind” however we can admit that this is the second time we have seen the yen cause market indigestion in the last 15 years. Market confidence is slowly rebuilding with the VIX back to pre-unwind levels of late July 2024.
It has been satisfying to see the commodities that G50 is most leveraged to (gallium and gold) remain at their highs. Gallium saw no material change in price and gold has rallied back to new highs with little to no attention by market commentators. The lack of leveraged speculative dollars in the gallium market and strong fundamental consumer demand will serve to keep the commodity price well supported.
Open interest in the gold market remains historically low thus real money flows again dictate gold moves. The largest marginal buyers of note in gold are SE Asian central banks with formidable firepower. New all-time highs at the close of the week say it all. The trend is your friend.
Gallium, germanium, graphite……antimony.
This week China announced the implementation of a new policy designed to restrict antimony exports to the rest of the world. This follows similar initiatives on other strategic metals like gallium in August 2023.
As we have often mentioned here before, the periodic table is bifurcating into 2 types of materials, critical and strategic. We at G50 believe that due to chronic underinvestment in supply, most of the periodic table is critical to the modern world and its function over the medium to long term. Within this group of critical materials exists a core group of strategic materials. These are materials that achieve one or more long term goals and creates advantages over the long term under conditions of uncertainty.
Expect to see the list of strategic materials grow as modern warfare, energy systems (green and incumbent), and general technology advancement require more of these strategic materials to function. Incentivizing non-China supply will be price inelastic but first requires a broader acceptance that we are in a new battle for these strategic and hotly contested materials.
Go Gallium, Go Gold, Go G50!
Robert Friedland on X summarises the situation best:
China squeezes Western militaries with export ban on weapons metal
Singapore – China is tightening its grip over global critical mineral supplies by placing export controls on antimony, a metal used widely in ammunition and other military applications that has surged in price this year.
The country will apply the restrictions to antimony and antimony-related materials from September 15 to safeguard national security, a statement from the Ministry of Commerce said. That adds to earlier controls on other critical minerals including gallium and germanium, which have set off alarm bells in Washington.
