The metals markets were mixed this week with Gold, the most interest rate-sensitive metal out of the basket, continuing to run higher with no sign of consolidation. Last Wednesday's data dump sent 30-year Bond futures to the highest level since September. The tailwinds came from a dovish Bank of Japan and slowing U.S. inflation data (CPI last week, PPI Thursday). Still, there has been an undeniable safe-haven bid in Bonds and Gold due to data showing a deteriorating U.S. economy. We are not in 2022 anymore, inflation is not rising precipitously, and the Treasury market is not forecasting endless Fed rate hikes. Have we crossed into the dark side of the economic cycle, where slowing economic growth without a Fed pivot will take down stocks? We do not know the answer yet, but Bonds and Gold are beginning to say so.
Gold/Silver Ratio
Looking at the chart above, it is important to see that since mid-December, Gold has been accelerating against Silver. This is due to the peak in Treasury yields and the softening of industrial demand. 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.
Daily Copper Chart
While Silver's performance remains essentially unchanged from the start of the year, Copper has been the true leader of the industrial metals. The demand from China and the supply issues in Peru have made Copper the best-performing commodity year to date, up 11.5%!
Daily Gold Chart
The "soft-landing" narrative has gripped investors into buying any weakness in the heavily shorted basket of U.S. Equities and Crypto Currencies. Once the economic cracks become apparent, investors will flee those assets and transition a larger flow of money into Gold. That should push Gold through $2000/oz and allow Silver to play "catch-up" with an accelerated move to the $25-26 area. Remember, if you invest in Precious Metals or purchase physical metals, you must ask yourself the purpose or goal. Is it to make money, or are you buying and holding with no intention of selling? If your goal is to make money from a shorter-term move, say in the next 6-12 months, then you will want a highly liquid asset with a favorable tax structure and a market to buy or sell nearly 24 hours/day.
For these shorter swing moves, futures contracts 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.
