What do higher copper prices predict?

Changes in copper prices can affect a wide range of industries and economic activities.

Thank you for reading my Financial View Peter Herman.

Being informed about financial events is not enough. Only with the protection and optimization of our own wealth in practice will we be well-prepared for the future.

Global Debt is Not Decreasing

Global debt increased by $1.3 trillion in the first quarter of 2024, reaching a new record level of $315 trillion. Additionally, after three consecutive quarters of decline, the global debt-to-GDP ratio started rising again in the first quarter of 2024. The debt of developing countries exceeded $105 trillion in the first quarter of 2024, with the largest increases coming from China, India, and Mexico.

In 1971, the gold standard was abandoned… Do you notice how this has affected U.S. debt?

U.S. net interest payments as a percentage of government revenue are projected to reach 34% by 2054. This means that ONE THIRD of all government revenue would be spent solely on servicing national debt. In the last 8 years, the percentage has already doubled to about 15%, reaching its highest level in three decades. Meanwhile, nominal annual interest payments have exceeded $1 trillion for the first time. If the Federal Reserve keeps interest rates unchanged, we could see $1.6 trillion in annual interest costs by the end of the year.

The M2 money supply is increasing again, which is important for market liquidity. What’s on the horizon?

In the U.S., the rise in unemployment claims… An important sign for the FED when adjusting interest rates.

Decline in German Power

The German business model was previously based on:

1. Cheap energy from Russia
2. Cheap subcontractors in Eastern Europe
3. Constantly growing exports to China

All three elements have now disappeared.

One of the reasons why German industrial production has been declining in recent years is that Germany has become too expensive compared to European competitors.

Pensions Will Be There, But What Will Their Value Be?

"Unfunded" pension entitlements in major European countries represent between 300% and 500% of GDP. This means that pension promises to be paid out in the future are 3-5 times larger than the current gross domestic product (GDP) of these countries. The downsides include financial pressure on the state budget, potential reduction of other public services, and possible tax increases or borrowing to cover these obligations.

When the green color doesn't mean something good… In some European countries, the highest income tax rate is over 50%. Slovenia is among them.

The Biden administration plans to raise tariffs on imports of Chinese electric vehicles from 25% to 100%, intensifying efforts to protect American industry ahead of the U.S. elections.

What to Bet On? Silver or the U.S. Tech Market

The dot-com bubble burst in 2000 led to Nasdaq losing 95% of its value compared to silver.

The global solar energy boom is driving a surge in demand for silver.

Demand for silver has exceeded supply by an average of 190 tons per year over the past four years. The total supply-demand deficit over the past four years amounts to 760 tons.

What to Bet On? Gold or the U.S. Industrial Market

The Dow Jones Industrial Index to gold ratio. A downward breakout of the ratio indicates that gold will outperform and exceed the industrial developed equity market.

Gold = Swiss Franc vs. U.S. Dollar.

The Swiss Franc is much stronger than the U.S. Dollar. This chart will indicate further growth in gold.

Importance of Copper

Based on the chart below, by 2050, despite the absence of electric vehicles, we will still see twice the demand for copper as its supply due to the global electrical grid... And there will never be a year of surplus.

Copper, a key raw material in numerous industries, is already at its highest values in history. This can have a significant impact on a renewed inflationary cycle and more expensive products and services.

An important saying to keep in mind...

All the best until next time.

Peter Herman

The newsletter "Financial View Peter Herman" does not constitute an investment advisory service. Its content does not constitute recommendations for purchase or offers to purchase, but I want to inform you about important information that I personally consider important. For all advice and suggestions, I am available with an individual consultation or via email [email protected] .