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As the white metal hangs on for dear life, the fundamentals continue to grow more ominous. Unveiling the RealityWhile silver has been a major beneficiary of the ‘bank crisis means rate cuts’ narrative, this is 2021/2022 all over again. When the crowd attempts to front-run a recession, it negates the recession due to the stimulative effect of lower long-term interest rates. That’s why sentiment surrounding silver has gone from euphoric to catastrophic several times over the last two years, and we believe another shift should occur over the next several months. To that point, not only have rate-...
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As anxiety grips the white metal, is a retest of the 2023 lows or highs more likely? There is a misnomer in the financial markets that inflation is a supply-side phenomenon. In a nutshell: COVID-19 restrictions, labor shortages, and manufacturing disruptions are the reasons for inflation’s reign. As such, when these issues are no longer present, inflation will normalize and the U.S. economy will enjoy a “soft landing.” However, investors’ faith in the narrative will likely lead to plenty of pain over the medium term…. U.S. households have nearly $3.89 trillion in their checking accounts. For c...
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Investor Attitudes vs. Silver Market FundamentalsTypically, several factors that are positive for institutional investment, like financial market turmoil and weak GDP growth, negatively impact key demand segments like industrial, jewelry, and silverware. 2022 was no different. Find A Qualified Financial AdvisorFinding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re r...
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After a brief rally, U.S. nonfarm payrolls helped suppress silver’s momentum. Is there more downside ahead? While the permabulls bought into the rate-cut hype, we warned on Apr. 14 that the fundamentals did not support their enthusiasm. We wrote: Market participants are pricing in ~60 basis points of rate cuts. If those cuts get priced out, the market impact is similar to the Fed raising the U.S. federal funds rate (FFR). No matter how you slice it, no cuts means the FFR stays higher for longer, and a realization should have a profound impact on the PMs….. Mining stocks are particularly vulner...
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After support became resistance, are lower prices ahead, or is this just a cooling-off period? To explain, the red line above tracks the daily copper futures price, while the gray line above tracks the daily silver futures price. If you analyze the relationship, you can see that the pair have largely moved in lockstep since late 2021. And with copper trading near its March lows, silver’s outperformance is likely living on borrowed time. To further emphasize the point, please see the pair’s relationship on the monthly chart: To explain, the box in the middle shows how when silver decoupled from...
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Should you buy the headline momentum? With bank-failure hysteria upending nearly all assets except the PMs, silver has benefited from the fear. And while basic accounting highlights how these issues are about short-term liquidity and not long-term solvency, investors continue to ride the momentum. Please see below: More importantly, the release highlights how wage inflation is far from a level that aligns with 2% output inflation. Please see below: To explain, the table above shows how the median change in annual pay for job-stayers and job-switchers was 6.7% and 13.2% in April. Moreover, ever...
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For some time, silver’s chart was very boring. It did nothing for weeks. Precisely, it kept trying to break above its 61.8% Fibonacci retracement level, and then it invalidated that breakout. And then it happened. ** Was It a Surprise?Silver plunged below its 61.8% Fibonacci retracement, which – in the world of technical analysis – means “that’s no correction, that’s a new medium-term decline”! Q4 2022 hedge fund letters, conferences and more That happened just a month after the white metal tried to move to new yearly highs, which is… Not surprising at all. At least to those who have been foll...
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Fed officials flexed their muscles during the last FOMC meeting. Silver tripped and fell in response, but that didn’t last long – why? Actually, we can read that “no participants anticipated that it would be appropriate to begin reducing the federal funds rate target in 2023”. That’s bad news for the precious metals, such as silver and gold. Q4 2022 hedge fund letters, conferences and more What’s more, the minutes revealed the FOMC participants’ worries about the dovish hopes of investors. The Fed decided to emphasize that it’s not going to change its monetary policy and cut interest rates any...
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Is the era of ultra-dovish monetary policy in Japan ending? Maybe, but the Bank of Japan remains cautious; it tightens without tightening. Q3 2022 hedge fund letters, conferences and more It means that the market’s long-term yields are allowed to move 50 basis points on either side of the target now. As a result, the 10-year yields on Japan’s government bonds jumped from the previous cap of 0.25% to 0.46%. Governor Kuroda said that the change was introduced to improve bond market functioning, and it’s not an interest rate hike. But the net effect is the increase in the interest rates, just as ...
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Winter has come – at least for the cryptocurrencies. Could precious metals benefit from it, and in what way? Q3 2022 hedge fund letters, conferences and more Indeed, as you can see in the chart below, the price of Bitcoin, the most famous cryptocurrency, plunged about 75% from its historical peak of $67,510 in early November 2021 to about $17,000 right now. I believe you understand now why crypto winter is a much more accurate term than just a bear market! However, there is one important difference between these two notions. Although ups and downs are pretty normal in the stock market or the s...
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