Metals Minute 143: On the Road Again - Natural Gas Connection

News on the geopolitical front has gone from bad to worse, with the 300,000 troop mobilization mentioned Wednesday being only the first phase of a 3-phase plan to mobilize 1,000,000 troops from the nations of the Russian Federation. Leaked documents intercepted from Western intelligence sources reveal the extent of NATO involvement in the conflict, reinforcing the belief across Russia that they are involved in a fight for their lives. Whether their perceptions are realistic or not, a cornered animal can sometimes be the most dangerous.

The conflict directly impacts the availability of natural gas throughout Europe and the United States. The price of natural gas directly or indirectly influences a wide range of costs, such as electricity (up 350% in Europe), fertilizer (up 850%), metal production, and food (up 40%), among others. Electricity costs across Europe have shuttered industries, while rate increases of 64% have been announced in states like Massachusetts. Anecdotally, my parents monthly natural gas bill has increased by 74% this year, here in middle America.

The vortex of negative news has markets trending lower worldwide, including the paper markets for precious metals. But there is a frenzy for physical metal, with gold trading nearly 4% higher on the Shanghai exchange than in London.