The Perfect Storm in the Commodities Market: New BRICS Currency and Chinese Export Controls?!

According to management consultant and author Dr. Markus Krall, with a trade surplus of 950 billion dollars, as exhibited by the BRICS nations, their trading partners would have to acquire 16,000 tons of gold to be able to pay with a gold-backed currency in the future. This would lead to a gold price up to 10 times higher and a repricing of many other commodities. Especially due to the explosively rising inflation in the West, many metals would become more expensive. The first signs are already visible: After the news began to spread like wildfire on Monday, the gold price shot up the very next day.

In our quiz two weeks ago, we asked our followers how they assessed the price development of gallium and germanium after China announced export controls. Today we have the answer: both metals have increased in price. With a growth of 4.68% in the period from 2023-07-03 to 2023-07-17, the price of germanium has only risen slightly so far. This may still offer good opportunities for a subsequent purchase before the rally REALLY takes off. The price of gallium, however, increased by 13.81% during this period, showing a clear reaction to China’s announcement. So far, so predictable. Both germanium and gallium are indispensable for the development of semiconductors. It is no wonder, then, that the industry is now stockpiling to be prepared for all eventualities.

What surprised us greatly, however, was the price increase of indium. The value of the silvery technology metal rose by 12.76%. This growth far exceeds that of germanium, which is directly affected by the export controls. Indium and gallium are chemically relatively similar and are both used in CIGS solar cells. Since China also intends to monitor exports of machinery for the construction of solar cells and has already targeted two solar raw materials, germanium and gallium, it is highly probable that indium will be next. Therefore, “What you have, you have” is definitely the right motto.

Last Thursday, Foreign Minister Annalena Baerbock presented the government’s new China strategy. The goal outlined in the 90-page paper is to make Europe more independent of China’s monopoly in the supply of critical commodities. In her speech, Baerbock emphasized the responsibility that German companies themselves bear for their commodities supply: “To rely on the invisible hand of the market in good times and to demand the strong arm of the state in difficult times, in times of crisis, will not work in the long run; even one of the strongest economies in the world cannot sustain that.”

For well-positioned large companies with their own commodities storage, this might work. But who takes care of the supply for our startups? These form an important, vulnerable industry for the development of new green technologies and technological advancement in general. We, as a society, must stand together to ensure their supply. We at Noble BC actively help by bringing the commodities crucial for our future into the country. This provides private investors with the opportunity to enter a still young, exclusive market with immense opportunities and to invest in the only asset that currently works: commodities.