It was another good week for precious metals, with Gold gaining over 2.4% and Silver tacking on another 1% after the much anticipated CPI data release showed that inflation was continuing to cool. The problem the Fed will still face is that inflation remains near 40-year highs and their 2% inflation target is not attainable. They may be able to slow the rise of inflation by raising rates however, they are also slowing economic growth simultaneously, creating a deflationary environment. Remember, Gold historically performs at its best and outperforms other metals in deflation because of the anticipation of accommodative measures, and the deeper the deflation, the more the accommodation. Consider it the "light at the end of the tunnel."
Daily Gold/Silver Ratio
Daily Silver Chart
While prices look to be short-term overbought, any corrections in precious metals should be shallow. Historically, the metal tends to lag Gold because over 50% of Silver usage is industrial demand. That is not to say that once the ratio becomes too disproportionate, bargain hunters will come in and lift Silver prices higher. To further help you develop a trading plan, I went back through 20 years of my trading strategies to create a Free New "5-Step Technical Analysis Guide to Gold that can easily apply to Silver." The guide will provide you with all the Technical analysis steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Gold.
Looking Ahead
Next Wednesday, we will see the latest release of PPI, which is a leading indicator of consumer inflation and could trigger another bout of volatility. It is that volatility that we can look to reenter at key levels of support, such as $1050/oz on April Platinum, $23.25/oz on March Silver, and $1850/oz on April Gold. We can easily see a move up to $1150 on Platinum, $25 Silver, and $2000 Gold in the near term. I believe futures are the best investment vehicle for attempting to profit from a short-term rise in precious metals. If you have never traded futures or commodities or would like to learn more about taking delivery of Silver, I just completed a new educational guide that answers all your questions on transferring your current investing skills into trading "real assets," such as the 1000 oz Silver futures contract. You can request yours here: Trade Metals, Transition your Experience Book.
