A single day 5% rise in the price of copper, widely seen as a reliable forward economic indicator, was caused by a combination of a threatened 25% tariff on U.S. copper imports, and demand for the metal in a re-awakening German armaments sector.

At US$4.77 a pound copper is back to where it was 10 months ago as consumers of the most widely used industrial metal scramble to lock in supply thanks to a chain reaction of uncertainty stirring commodity and equity markets.

The German stock market, driven by key armament maker Rheinmetall, rose by 3.5% on Wednesday as orders flowed for its armoured vehicles, while construction stock Hochtief did even better, up 15% thanks to a dramatic shift in German government policy to increase government debt to try to kick start a sluggish economy.

Gold relished the turbulence, rising by US$50 an ounce to US$2922/oz (US$20/oz short of its all-time high) even as interest rates rose sharply in Europe and edged higher in the U.S, a sign that investors sense an increase in inflation as governments return to printing cash.

Central banks share the concern about rising inflation, returning to the gold market after a few weeks on the sideline.

The resumption of central banks’ gold buying was the key feature of a report this week from the World Gold Council which started by saying that “central banks stay bullish on bullion in January,” acquiring an additional 18 tonnes.

Central bank gold buying, which can be directly tied to fears of inflation caused by some of Trump’s economic policies, might have delayed the arrival of peak gold which had been edging closer.

If central bank buying continues at a brisk pace a record gold price of more than US$3000/oz could now be reached sooner rather than later.

Nowhere is the sound of government printing presses churning out paper (fiat) money being heard louder than in Germany, a country with a deep fear of inflation after its catastrophic experience with hyper-inflation in the 1920s.

Borrowing costs in Germany rose this week by the most in almost 30 years with the 10-year bond at its highest since 1997.

Germany is not the only country borrowing more to try and boost growth according to a report from S&P Global Ratings which said government bond issues from 138 countries would this year lift overall government debt to a record US$12.3 trillion.

Much of the money being raised by governments is earmarked for defence spending, a direct reaction to Trump’s demands that European countries spend more on their armed forces and take responsibility for events in Ukraine.

Russia, which is on the other side of the Ukraine war, is also starting to benefit from Trump’s demand for a peace deal, with the Moscow stock market up 3.5% this week, taking its gain since Trump was elected in November to 34%.

Australia is also feeling the effects of global economic events even as election season starts in WA this week before spreading nationally, though exactly when the country votes will not be known until after the passage of tropical cyclone Albert over Brisbane and the heavily populated regions north and south of the Queensland capital.

The combination of political, financial, and weather uncertainty drained investor optimism this week with the all ordinaries index down 1.3%, taking the one-month fall to 5.1%, meaning the gain in January has been wiped out.

Gold stocks, as measured by the gold index, were the clear local winners this week with the ASX gold index up 2.7%, taking the increase since the start of the year to 20%, and the gain over the last 12 months to 47.5%.

Most gold stocks gained ground this week with moves (and news) that included:

  • West African, up 37c (22%) to an all-time high of $2.11 after reporting a strong ($246 million) profit for calendar 2024 from the production of 206,622 ounces of gold at an all-in sustaining cost of US$1240/oz.
  • Greatland Gold, a London-listed stock with close Australian connections, added 1.25 pence (15.8%) to 9.19p. CG Capital Markets reckons Greatland is heading up to 19p.
  • Bellevue Gold added 11c to $1.28 with the rise coming as investors digested its strong profit report. CG sees $2.20 as the Bellevue price target.
  • Mithril Silver and Gold rose by 4.5c to 38c after reporting multiple high-grade veins from the latest drilling at its La Soledad project in Mexico with a best hit of 20.5 grams of gold a tonne, plus 1833g/t of silver over a 4.95 metre intersection from a depth of 110m, and
  • Northern Star, adding 12c to $17.32 while other sector leader gains included Evolution, up 28c to $6.44 and De Grey, up 4.5c to $2.03.

Lithium stocks, despite another tick down in the price of the metal and negative reports from Morgan Stanley and S&P Global, edged up with Patriot Battery Metals adding 1c to 28c after reporting fresh high grade drill hits in Canada, while Liontown also rose by 1c to 67c.

Morgan Stanley said its positive outlook for lithium was being challenged as idled capacity restarted earlier than expected. S&P warned that a glut of metal would sit on the price for longer than previously expected.

Iron ore stocks staged a late recovery after being heavily sold down early in the week. The boost came from optimism about China pumping more cash into its beleaguered property and infrastructure sectors which could lift demand for steel.

Fortescue Metals, which touched a three year know of $15.88 on Wednesday rose back to $16.11 to still be down 86c over the week. Mineral Resources crept higher on Thursday but not enough to wipe out a $1.43 fall to $22.02.

Uranium slipped US$1 lower to US$64.70 a pound thanks largely to the effect of a weakening oil price on the broader energy sector, a downward trend also piling pressure on the troubled renewables industry.

Deep Yellow was 2c weaker at $1.02. Boss lost 13c to $2.40 while Lotus defied the downward trend by holding steady at 18c, possibly saved by a bullish report from CG Capital Markets which reckons the stock has a target price of 37c.

Antimony-exposed stocks had another solid week as the tight market for the critical metal which has military uses as well as being a flame retardant continued to push the price higher, having cleared the US$45,000 per tonne mark, up 300% in six months.

Sun Silver added 4.5c to 64c after reporting widespread antimony mineralisation from the latest drilling at its Maverick Springs project in the U.S. while Southern Cross Gold rose by 10c to $3.60 as interest grows in its Sunday Creek project near Melbourne.

Other news and market moves of interest this weeks included:

  • Lynas Rare Earths, up 44c to $7.25 as a global rush develops for critical metals. UBS has Lynas as a buy with a price target of $7.95.
  • Industrial Minerals added 9c to 21c as interest grows in its high-purity quartz mine near Port Hedland in WA.
  • Litchfield Minerals rose by 6c to 17c after reporting a big geophysical anomaly on the Oonagalabi project in the Northern Territory which appears to warrant drilling.
  • Burgundy Diamonds continued to melt under the weight of a diamond market stuffed full of synthetic gems, falling by another 1c this week to 4.8c. The stock was trading at 23c at this time last year, and
  • Aeris slipped 0.5c lower to 17c despite reporting what Bell Potter said was a better than expected first quarter result which should help the small copper producer rise to 30c.