Tim Pickering: The link between tech and commodities is strong and growing stronger
As an example, it is generally understood that central banks raise rates in an attempt to control inflation. Yet what is less understood is that raising rates only affects our spending, the so-called “demand-pull inflation” associated with manufactured goods, whereas it does little to control the “cost-push inflation” associated with commodity prices and wages.
As we divert our attention from fossil fuel consumption, there will be a significant impact on demand for lithium, cobalt, graphite for batteries and some less sexy metals such as zinc, nickel and, yes, copper,Most analysts predicted the global demand for lithium would double or even triple by 2030.Cobalt was facing a global supply deficit that could grow to 5,340 tons in 2020 from 885 tons in 2018.
It is extremely difficult to time any financial market, but commodity markets are equally challenging. The reality is that commodities are the most diverse asset class — cotton is not like crude is not like coffee is not like canola. Yet all these things are important to our daily lives and economic realities.
We think big tech may be the next big commodity buyer, and at a time when supply is increasingly tight and prices are already on the rise. VANCOUVER — If you shop online you're likely familiar with the experience — you agree to buy for a certain price, but by the time you check out, the cost has ballooned with fees and surcharges. Place a shipping order with Canada Post and you might be hit with a "fuel surcharge" of almost 25 per cent. Buy movie tickets, flowers, make travel plans — all could be subject to hidden fees that are subsequently added to the originally quoted cost.
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