Looking to the Fiscal Cliff and Beyond: The Importance of Predicting the Future
December 28th, 2012 by kurtz metals
Now that the holidays are over, the focus has turned back to the looming fiscal cliff. We’ve mentioned before in our blog that the price of metals is affected by events across the world, from economic hardships to political turmoil to elections half a world away, and the fiscal cliff is no exception.
Moving forward, there are discussions of compromises that need to be made. The question everyone’s asking is whether those compromises will be made before January 1st. With the evidence so far, it looks like that won’t be the case. As for what this holds for the market, it all depends. It’s our feeling that if a resolution is reached quickly, there will be positive response in the market. The longer everything drags on, the more that positive response will be minimized.
At Kurtz Metals we have to move forward despite uncertainty, and do our best to prepare for what lies ahead. In times like these, we’ve found that the best choice is to be conservative with our metal prices. Our suppliers are looking to receive the maximum value on their scrap, and we’ll never pay less than what that scrap is worth. But keeping our prices conservative allows us to minimize risk in the case of prices dropping between when we purchase metal and when we sell it.
One fact that is easily overlooked is that the fiscal cliff is not an end all be all, regardless of the outcome. Unfortunately, even avoiding the fiscal cliff won’t mean that all economic engines are revving forward at warp speed. Come the new year we’ll still be in a slow recovery economy with higher unemployment than we would like and manufacturing growth slower than we’d all like to see.
What resolving the cliff will do is provide stability in terms of market growth and value growth in the coming year. Besides having the largest economy in the world, the U.S. also boasts one of the most stable and transparent economies in the world. The state of the U.S. economy factors into people’s perspectives the world over. Avoiding the fiscal cliff would help to increase confidence in that U.S. stability, and while not a magical solution, it would still provide a strong basis for recovery.