Tariff Threats Boost Silver & Copper Prices

The threat of tariffs is ramping up ahead of the inauguration of President-elect Donald Trump. This is pushing up silver and copper prices, opening opportunities in those two metals.

The fear of trade wars was made apparent as silver and copper prices ticked higher in last week's trading session. Traders are placing bets that the incoming president will impose tariffs on silver/copper imports, potentially sparking a global trade war.

"The fresh spike in premiums comes as uncertainty and anxiety over the likely scope of Trump’s trade policies ramps up across financial markets ahead of his Jan. 20 inauguration," Bloomberg reported. "The Washington Post reported his team are planning narrower import tariffs on critical goods, potentially including copper, though Trump denied the story."

Additionally, investors could be seeking ways to hedge against sticky inflation by diversifying their assets to commodities like silver and copper. A hotter-than-expected labor market could quash the notion of more rate cuts to come, causing investors to position their portfolios for more inflation.

“Investors around the world have started the year looking for protection against sticky and potentially rising inflation, fiscal debt worries and the unpredictability of Trump,” said Ole Hansen, head of commodities strategy at Saxo Bank.

With the potential for price increases, this opens the door for opportunities in silver and copper exchange-traded funds. Furthermore, the ongoing push for alternative energy sources will continue to add more fuel to the proverbial flame for global electrification. With that, silver and copper are poised for growth given their high usage in electrical energy technology. This potential growth exposure highlights a pair of funds from Sprott.