Top trade is silver, says Guggenheim analyst
Silver has more room to run, said Guggenheim Global chief investment officer Scott Minerd in an interview with Bloomberg.
"When you look at the relative values of silver and gold, silver is about 65% below its prior peak while gold is very close to its prior peak," said Minerd.
Gold is currently holding near the $1,550 support level. Early this month, gold broke through $1,600 and hit a multi-year high due to geopolitical tensions. Today, silver is trading near $17.69 an ounce.
In a note released earlier this week, Minerd wrote that global central banks are fueling a ponzi scheme. He said bankers are propping up a deteriorating corporate bond market, and that there is a flood of central bank liquidity.
"This brings to mind the famous observation by economist Hyman Minsky, who stated that stability is inherently destabilizing. That is to say that long periods of relative stability in risk assets causes investors to keep upping the risk during a long period of calm," wrote Minerd. "Ultimately, this leads to what he called a Ponzi Market where the only reason investors keep adding to risk is the fear that prices will be higher tomorrow (or in the case of bonds, yields will be lower tomorrow)."
He said the current market conditions remind him of the lead up to the 2001 and 2002 recession.