Stronger. Faster. Higher. Shinier. Today, as many athletes pack their luggage with newly acquired Olympic hardware, we melt down these medals, these priceless representations of human accomplishment, passion, and perseverance – and coldly consider them as commodities against a fraught financial backdrop.
Up top
- Small business: The federal government prematurely cancelled a $4-billion program to help small businesses upgrade their technology because of budget cuts, documents show, and not because of the program’s success, as Ottawa said at the time. Chris Hannay reports.
- Slow sales: Toronto home sales fell in July despite a second recent interest rate cut, as inventory piled up and sapped the motivation of buyers to make purchases. Rachelle Younglai looks at what’s keeping buyers on the sidelines.
- Sequential moderation: That’s what Airbnb is calling slowing demand from travellers after reporting a disappointing outlook for a third consecutive order.
In focus
Gold rush
U.S. silver medalist Kate Douglass, Canadian gold medalist Summer McIntosh, and Australian bronze medalist Australia’s Kaylee McKeown, hold up their their precious commodities after the 200-metre individual medley.MANAN VATSYAYANA/Getty Images
First, a test of the market’s mettle:
Not even precious metals, historically a haven from volatility, were left out of the mayhem that befell markets this week. But just as economists were pointing out that the underlying demand for gold, silver and copper (more on that in a minute) isn’t collapsing, investors caught their breath and realized the sky isn’t falling either.
- As Matt Lundy and Mark Rendell write, the sell-off in equity markets looks overblown when compared with a bevy of indicators pointing to a firm expansion.
- Investors looking for shelter from turbulence can look beyond metals. David Berman makes the case for finding safety in the TSX, where some key stocks made gains just a day removed from the global rout.
And now, perspective from the podium
Still, in times of uncertainty, investors like to find a safe place to hide. Historically speaking, they’ve found relative safety in precious metals.
Which brings us to the medals. When Olympians win gold, they’re winning six grams of gold wrapped around 523 grams of silver. Silver is made of silver (Ed note: Sparkling insight, Chris), and bronze is mostly copper. And this year, Paris officials introduced a monumental new ingredient: iron from the Eiffel Tower.
No matter their components, the medals’ market value fails to account for what they represent to their owners: a physical manifestation of their biggest dreams. Plus, different people attach different values to things they enjoy. But let’s just pretend like we don’t have hearts for a minute.
Bronze, silver and gold-medal athletes could stand to make anywhere from $3 to more than $300 by the time the Brisbane Games begin eight years from now. But that doesn’t tell us much about what the rest of us might expect from the commodities that make their awards.
🥇 Gold
Outlook: 2028: $2,640 | 2032: $2,865 | US/ounce
Typically seen as a haven for investors looking for safety from geopolitical risks and economic uncertainty, the precious metal has lived up to its reputation. The price of gold has climbed to new heights this year and looks poised to hover in sight of that range even with dips over recent days.
- The expected sustainability of gold can partly be chalked up to rising geopolitical tensions and a tight U.S. presidential election.
- Although China showed signs its appetite for gold had its limits after a prolonged spending spree, analysts expect the country’s central bank to bounce back in if the price lowers.
- Investors are expected to keep their interest in the metal as central banks ease lending rates around the world.
- The World Gold Council argues there is “strong evidence” to suggest that holding gold as part of a diversified investment portfolio will make that portfolio more resilient in response to the effects of climate change. I don’t know how far they modelled the potential negative effects out, but I would like to observe: You cannot eat gold.
🥈 Silver
Outlook: 2028: $31 | 2032: $33 | US/ounce
Although silver largely follows the shape of gold’s market trajectory, its price is somewhat cheaper at around 1/76th of the cost. But given its uses, silver makes for a dynamic economic indicator.
- Since more than half of silver is used for industrial purposes, it’s a key gauge of economic health across sectors and regions.
- Demand for mined silver has outpaced supply for a few years now as growth accelerates in emerging markets such as India and many sectors reliant on electronics.
- It’s used in electronics, jewellery and solar panels.
- And its high thermal and electrical conductivities make it well-suited for power generation.
But where gold is stored in banks, under beds or around Summer McIntosh’s neck, the vast majority of silver production ends up in landfills. That could prove a sticking point over time.
🥉 Bronze
Outlook: 2028: $11,051 | 2032: $12,898 | US/tonne
Close to 90 per cent of bronze is copper. It’s the cheapest of the three materials under our microscope, but don’t mistake that for insignificance.
- Because copper is used in making so much of what powers the world in 2024, its price can be a powerful leading indicator of economic health.
- It’s used in electronics and power generation, and combined with other metals to make alloys such as brass, bronze.
- Given it durability and malleability, it’s an essential material in electric vehicles – used in its motors, batteries, wiring and charging stations.
The EV industry’s health will weigh heavily on copper’s fortunes, and vice versa.
*Outlooks for gold, silver and copper provided by Oxford Economics
The outlook
On our radar and reading list
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On a freelancer’s budget: What it would cost to live like Carrie Bradshaw in Toronto in 2024?
Morning markets
Global markets found steady footing, with stocks rising in Asia and Europe, as investors sought to recoup from the global selloff earlier this week. Wall Street and TSX futures pointed higher as risk appetite returned on another busy earnings day.
Overseas, the pan-European STOXX 600 was up 1.48 per cent in morning trading. Britain’s FTSE 100 advanced 1.1 per cent, Germany’s DAX gained 1.31 per cent and France’s CAC 40 rose 1.67 per cent.
In Asia, Japan’s Nikkei closed 1.19 per cent higher, while Hong Kong’s Hang Seng rose 1.38 per cent.
The Canadian dollar traded at 72.77 U.S. cents.