Believe it or not, the big deal for precious metals this week was not the U.S. Election.
It was news that Pfizer and BioNTech’s COVID-19 vaccine was over 90% effective in preventing the virus, and would likely be among the first to receive FDA authorization.
Monday was massively risk-on, with the Dow soaring 4% to a new record high, ten-year treasuries yields shot up almost 17% in a single day as investors dumped bonds, and oil was ahead 8%.
Meanwhile, the U.S. dollar index gained about 60 basis points or 0.65%, while higher-beta currencies jumped.
Gold and silver both sold off quite strongly and stayed near their lower price levels.
Naturally, some gold and silver enthusiasts are asking themselves if a vaccine is enough to kill the Covid-19 virus, as well as the precious metals bull market.
And based on the initial reaction of these metals, it’s a natural question.
So let’s look at the implications.
Is The Gold and Silver Party Over?
The encouraging news everyone’s been waiting for appears to finally be here. We’re getting a glimpse of light from the end of this long tunnel.
As a result, gold dropped $84 or 4.3%, while silver lost 5.3%, on this news.
But is this a sign of things to come, or a knee-jerk reaction that’s just short sighted?
Although highly positive and very reassuring, the truth is we’re not going to be lining up tomorrow to get our first of two doses of Pfizer’s vaccine.
The road to normalcy, whatever that will mean, is still a long one.
Consider that Pfizer expects to only produce 50 million doses this year, and up to 1.3 billion in 2021. Logistics will be a challenge, as the vaccine will need to be stored at -70 degrees Celsius, which is much colder than other vaccines.
Storage, transportation, logistics, security, and prioritization will all be complex. The first to receive the vaccine will be higher risk people and healthcare providers. Two doses, 21 days apart, are required.
Basically, it’s going to take quite some time to get this vaccine rolled out and administered even in developed nations. Imagine for a moment what that might look like in developing ones. That could keep travel and other sectors, that can’t easily implement social distancing, from recovering early.
And I’ve barely scratched the surface of challenges brought on by a vaccine roll-out.