Disaster Demand in Precious Disaster Demand in Precious MetalsMetals

The disaster in Japan these days has made The disaster in Japan these days has made everything change. There are changes in everything change. There are changes in human daily life and also changes in trading human daily life and also changes in trading world, especially in world, especially in commodity tradingcommodity trading. . Talking about trading world, we need to Talking about trading world, we need to know how the markets were affected to plan know how the markets were affected to plan our business. Today, we will have a short our business. Today, we will have a short review with the review with the Gold Bullion ReportGold Bullion Report about about the topic: the topic: Disaster Demand in Precious Disaster Demand in Precious Metals.Metals.

These day, the last week’s earthquake These day, the last week’s earthquake in Japan has become a hot topic that in Japan has become a hot topic that

the whole world care about. It has the whole world care about. It has quickly escalated into a major disaster, quickly escalated into a major disaster, with the ensuing tsunami and nuclear with the ensuing tsunami and nuclear

reactor meltdowns. As noted, the reactor meltdowns. As noted, the earthquake was the worst in the earthquake was the worst in the

country’s recorded history, and the country’s recorded history, and the costs will no doubt be high in terms of costs will no doubt be high in terms of

victims as well as damage to key victims as well as damage to key industries and the Japanese economy. industries and the Japanese economy.

The initial reaction brought a fresh The initial reaction brought a fresh wave of interest into precious metals, wave of interest into precious metals,

but the current climate seemed to favor but the current climate seemed to favor liquidation of assets. What might the liquidation of assets. What might the future hold for precious metals in the future hold for precious metals in the wake of this disaster? We will go the wake of this disaster? We will go the next part of the next part of the Gold BullionGold Bullion report to report to

see if we can find the answer.see if we can find the answer.

Past performance is not indicative of future results.Past performance is not indicative of future results.***chart courtesy Gecko Software***chart courtesy Gecko Software

Past performance is not indicative of future results.Past performance is not indicative of future results.***chart courtesy Gecko Software***chart courtesy Gecko Software

The initial catalyst for commodity The initial catalyst for commodity investing is likely to come following this investing is likely to come following this round of sell-offs, which seems more round of sell-offs, which seems more liquidity based than fundamental in liquidity based than fundamental in

nature. It appears as though the sparks nature. It appears as though the sparks to this flight from to this flight from stocksstocks and and

commodities was struck as investors commodities was struck as investors sought cash. sought cash.

However, a shift is probably just around However, a shift is probably just around the corner as the traditional haven the corner as the traditional haven

status of markets like gold takes hold. status of markets like gold takes hold. To bolster this move, it is also possible To bolster this move, it is also possible

(Note that I – our expert - should (Note that I – our expert - should emphasize that I am not advocating emphasize that I am not advocating profiteering during tragedy) that the profiteering during tragedy) that the rebuilding of Japan could hold more rebuilding of Japan could hold more

potential for another bull run in potential for another bull run in commodities, especially precious commodities, especially precious

metals. metals.

The so-called commodity super-cycle The so-called commodity super-cycle was already underway, fueled by the was already underway, fueled by the

urbanization of countries like China and urbanization of countries like China and India. That additional consumption and India. That additional consumption and commodity demand was only weakly commodity demand was only weakly

met by increased yields and production met by increased yields and production for certain commodities.for certain commodities.

Sure, economic slowdowns might have Sure, economic slowdowns might have put a stopper in some of these markets, put a stopper in some of these markets, but where that bearish argument dead but where that bearish argument dead

ends, a bullish argument for the ends, a bullish argument for the investment side of the same investment side of the same

commodities picks up. Investors commodities picks up. Investors uncertaining about the future of some uncertaining about the future of some stocks and some currencies sought an stocks and some currencies sought an alternative asset in gold and bonds as alternative asset in gold and bonds as

a means of potential asset a means of potential asset preservation. preservation.

People may think of the question if that People may think of the question if that dry up when disaster strikes? Perhaps dry up when disaster strikes? Perhaps initially it will, but there is a long road initially it will, but there is a long road

ahead for Japan and the world ahead for Japan and the world markets. While certain things like oil markets. While certain things like oil

and perhaps even precious metals will and perhaps even precious metals will have a neutral to negative demand in have a neutral to negative demand in the devastated nation, the potential the devastated nation, the potential gains in consumption on the path to gains in consumption on the path to recovery and after have historically recovery and after have historically

balanced that picture.balanced that picture.

Now let’s consider the following ideas!Now let’s consider the following ideas!

We all know that Japan is one of the We all know that Japan is one of the world’s largest economies. This is world’s largest economies. This is the country that has a huge industry the country that has a huge industry in electronics, which means certain in electronics, which means certain physical metal demand. I means physical metal demand. I means components for electronics, laptops, components for electronics, laptops, and cell phones all require metals, and cell phones all require metals, including highly conductive gold and including highly conductive gold and silver….silver….

Even without direct demand from Even without direct demand from Japan initially, analysts are forecasting Japan initially, analysts are forecasting that China will ramp up their production that China will ramp up their production (and therefore metals consumption) of (and therefore metals consumption) of electronics and electronic components. electronics and electronic components. Their demand has already been higher, Their demand has already been higher, led by stronger jewelry and investment led by stronger jewelry and investment

sectors so a manufacturing boost sectors so a manufacturing boost would likely require another increase in would likely require another increase in gold and silver consumptive demand.gold and silver consumptive demand.

The automotive industry in Japan might The automotive industry in Japan might be likewise hobbled, and damage be likewise hobbled, and damage

assessments are still ongoing. This assessments are still ongoing. This means that whichever producers pick means that whichever producers pick

up the slack will have increased needs up the slack will have increased needs for automotive catalysts and for automotive catalysts and

components and – you guessed it – components and – you guessed it – PGMs like platinum and palladium.PGMs like platinum and palladium.

Another wonder that needs to make is Another wonder that needs to make is is that if current damage to products is that if current damage to products

and parts unlikely to leave things and parts unlikely to leave things salvageable?! It’s also possible. That salvageable?! It’s also possible. That

means replacement stock when means replacement stock when factories get up and running again.factories get up and running again.

And don’t forget other rebuilding efforts. And don’t forget other rebuilding efforts. Many lives have been lost. Here I do Many lives have been lost. Here I do

not want to downplay that, but there will not want to downplay that, but there will be a lot of basic building demand and be a lot of basic building demand and

that could result in an influx of cash into that could result in an influx of cash into the commodities markets as a whole: the commodities markets as a whole:

copper, aluminum, oil, natural gas, etc.copper, aluminum, oil, natural gas, etc.

Don’t forget that there could even be a Don’t forget that there could even be a boost to alternative energy sources on boost to alternative energy sources on

the heels of severe nuclear reactor the heels of severe nuclear reactor failures. That might mean natural gas failures. That might mean natural gas as well as solar power. Silver is a big as well as solar power. Silver is a big

part of the solar cell side of that part of the solar cell side of that industry, owing to its efficiency in industry, owing to its efficiency in

absorbing the sun’s energy. absorbing the sun’s energy. Harnessing new power technologies is Harnessing new power technologies is

a real possibility.a real possibility.