Paul Wong, CFA, CFA

Gold and silver prices surged in Q3 2024, driven by central bank buying and macroeconomic factors. While gold experienced a historic price increase, silver's price was influenced by both its precious metal value and industrial demand. YTD through September 30, gold is up 27.71% and silver has gained 30.95%.

Demand for electricity over the next decade will put pressure on the U.S. power grid to keep pace. New investment in power-hungry industrial facilities is driving demand, especially the data centers that support artificial intelligence (AI), U.S. reshoring initiatives and the steady electrification of the transport sector.

2024 has been an exciting year thus far for precious metals and critical materials. This webcast takes a technical perspective on the key drivers for gold, silver, uranium and copper, as all four metals enjoy positive markets. We also provide strategic portfolio allocation ideas for precious metals and critical materials.

Gold has surged above the psychological $2,500 level, driven by factors not easily explained by traditional market variables, suggesting possible central bank or sovereign activity rather than usual market dynamics.

Renewable energy is rapidly replacing fossil fuels as costs decrease and efficiencies improve with increased deployment, making it much cheaper than traditional energy sources. This shift, driven by the exponential growth of renewables, electrification, and efficiency, is expected to significantly alter global power dynamics as fossil fuels are phased out.

Gold gained 12.79% YTD by June 30, supported by central bank buying. Silver closed Q2 at $29.14, boosted by gold's breakout and global monetary expansion.

The fourth industrial revolution (4IR) is driving unprecedented change. Its dominated by AI, robotics, IoT, genetic engineering and quantum computing. 4IR technologies need critical minerals, fueling a new commodity supercycle.

The copper market is entering a new supercycle. Demand is surging as countries invest in clean energy and protect their access to copper, while supply is constrained by a lack of new mine development.

The rise of AI and data centers will boost global electricity demand, challenging power grids but benefiting clean energy sources like nuclear. This trend will also increase demand for copper.

The energy sector has experienced a remarkable transformation, primarily driven by the rapid growth and integration of renewable energy sources. Central to this transition is the advancement of battery storage technology.

Gold reached an all-time closing high and is up 8.09% YTD (as of 3/31/2024) after rising 13.10% in 2023. We believe several factors are in place for gold to move higher, such as strong central bank buying. 

February was lackluster for critical materials, but the backdrop remains very positive. The global commitment to clean energy hit a new milestone in 2023 as investment surged to an unprecedented $1.77 trillion.

The era of renewable energy is emerging and beginning to reshape power generation. Recent trends suggest that this is a fundamental transformation powered by the fall in renewable energy costs. 

What forces are likely to drive energy transition materials and precious metals markets in 2024 and over the next decade? We discuss 10 critical macroeconomic and market-specific themes.

The long-term trajectory for EVs is positive despite the recent slowdown. Lithium-ion batteries (LIBs) are the preferred battery technology for EVs, thanks to their superior technical properties.

On Friday, December 1, 2023, spot gold bullion registered an all-time high closing price of $2,072.22, surpassing the prior closing high of $2,063.54 reached on August 6, 2023.

As the U.S. advances in its pursuit of clean energy, it is strategically redirecting its energy security emphasis from oil to critical minerals, and diminish the influence of oil geopolitics and petrostates such as Russia.

Gold demand from sovereigns and central banks remains unwavering. Over the past decade, China has been committed to bolstering its gold reserves to enhance its economic and geopolitical standings. 

Uranium's performance helped the energy transition complex close higher in September. From a macro outlook, solar panels are emerging as a critical player in the global energy transition. 

Uranium had a strong August, contrasting with the decline of most energy transition metals due to China's economic troubles. The investment capital spurred by the U.S. Inflation Reduction Act (IRA) is turning the U.S. into a cleantech powerhouse.

The U.S. power grid desperately needs modernization. This is driving the development of energy storage systems and V2G (vehicle-to-grid) technology and is a major copper demand driver. 

Central banks and investment funds were the main players shaping the gold market in the first half of the year. Gold is reverting to its historical role as a significant reserve asset as central banks seek to diversify amid geopolitical uncertainties.

Energy transition metals miners posted strong results in June, with uranium mining equities leading the group. The U.S. is entering the early stages of a manufacturing supercycle driven by massive energy transition investment.

Gold attempted to breakout above $2,050 in early May before drifting lower as the U.S. debt-ceiling drama deepened and the U.S. dollar strengthened. At the same time, global central banks have been accumulating gold at a record pace. 

Lithium and lithium miners staged a sharp rebound rally in May and were the positive exception among critical minerals. The sector was weighed down by China's faltering recovery, ongoing global growth concerns and the U.S. debt ceiling drama. 

The gold market continues to be bullish as the probability of a recession rises, regional banking stress resurfaces and the Fed seems determined " get inflation down to 2%, over time".

The long-term secular growth outlook for energy transition materials got several boosts in April. Chile's decision to nationalize its lithium reserves reinforces the metal's role as a global strategic economic asset. 

As deglobalization accelerates, unfettered access to critical minerals is not likely to last. The old system of free and fair access to commodities, including critical minerals, is moving toward one marked by interregional competition, and unstable availability and pricing.

Gold posted a solid Q1 2023 gain of 7.96%, and is now up 21.38% from last autumn's low (9/26/22) following the most aggressive central bank purchases in decades and gold investment flows catalyzed by the U.S. banking crisis.