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  3. Metal for the Pedal

Metal for the Pedal

Submitted by Atlas Indicators Investment Advisors on July 31st, 2023

America’s Electro-Harmonix and its sister company in Russia, Sovtek, have manufactured one of the most popular guitar pedals ever: the Big Muff Pi. This equipment offered three coveted characteristics to artists: reliability, a distinct sound, and relatively low cost. In the 1970s, David Gilmour of Pink Floyd used it on two albums: Animals and The Wall. Other artists, including Thin Lizzy, Kiss, and Frank Zappa, also amplified their sounds through this pedal.

 

One of the key components of this legendary pedal is germanium. This metal not only helps artists create signature sounds, but it also has many other important uses today. Germanium is used in high-speed computer chips, fiber-optic cables, certain plastics, not to mention night vision devices and satellite imagery sensors.

 

Beginning next month, China will restrict access to germanium and gallium, another metal with many modern uses. Citing national security, these restrictions may be retaliation for America's curbing access to advanced processor chips and other technologies, also implemented in the name of national security. According to this article from the Associated Press, about half of the germanium used in America comes from China.

 

Although feedback, when harnessed correctly, can be part of a musician's signature sound (think Jimi Hendrix), in most situations, it is disruptive and unwanted. The world's two largest economies are playing protectionist notes. Secretary of State Janet Yellen is currently visiting Beijing, so perhaps the two nations will find harmony. She’ll need to maintain a balance to prevent further disruption from the feedback of these trade wars. Both countries may be rationally protecting their sense of security, but if they aren’t careful, this escalation may lead to further price increases, reduced economic growth, and strained relationships - a discord not usually experienced in the music business.

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