Hi Icm63My feeling is that the precious metals spurt we saw...

Hi Icm63

My feeling is that the precious metals spurt we saw overnight is probably mostly being driven by the tense situation in Peru.

I have been keeping tabs on this over recent weeks, as there is a realistic possibility that the unfolding crisis in this country could prove to be the catalyst for a surge in the silver price, depending on how things pan out.

Just to recap from my last post here, tensions in Peru flared up after the previous president Pedro Castillo was removed from office and impeached, following on from an attempt by the former leader to rule by decree. This has sparked protests across the country from his mostly southern rural support base, and the resulting violence has so far claimed the lives of 41 people.

The reason this crisis is so sensitive for metal prices is because the support base of the former president is concentrated in the southern mining regions of Apurimac, Ayacucho, and Hiancavelicia, home to some of the largest copper and gold deposits in the world, and yet also the poorest regions of Peru. Many of the supporters of the former president are also miners.

Keen-eyed commodity watchers might have noticed the tin price soar yesterday. That was directly related to the Peru situation, after Peruvian mine Minsur suspended operations at its San Rafael tin mine on Thursday, stating that it took the decision in solidarity with the victims of recent protests that have rocked the Andean nation.

Last Thursday, a Glencore copper mine was also targeted by protestors, with 2000 workers being evacuated as a result.

But apart from tin and copper, Peru is also notable for being one of the 'big three' silver producers, sitting just behind China and Mexico. And it is quite possible that the protestors may yet decide to 'weaponise' the silver riches of Peru in order to put pressure on the government.

For example, I noticed in one report last week the following quote from a protester: “We struggle every day. Look at how much a potato costs. What we make is not enough for anything. If Peru has silver, why are we poor? That is why people are fighting here.”

And another report of a few days ago quoted a declaration by several protest leaders that they were prepared for an 'endless battle'.

In summary, it is not too difficult to imagine that the situation we are seeing in Peru might well be setting the stage up for a major late-stage silver price surge.

So far, it doesn't seem that the movers and shakers of the local stockmarket have been paying much heed to the Peru troubles, but I suspect this might change soon.