Gold/Silver down

Investment Analysis Clubs Macro Economic Trends and Risks
1

https://www.cnn.com/business/live-news/stocks-markets-today-…

So, inflation is up and the bean counters have moved from a likelihood of the Fed increasing rates by .75% with a 10% chance of .5% to the likelihood of the Fed increasing rates by .75% with a slim chance of 1%. So the stock market is SHOCKED AND APPALLED.

Anyhow, what interested me is that both gold (-1.38%) and silver (-1.54%)are down. OK, I can see miners like BHP and RIO who are linked to global industrial production getting pinged, but sales of gold/silver (or derivatives) means that they are no longer, in context of buying increasingly yielding bond derivatives, considered hedges against inflation. It furthers my theory that they are hedges against liquidity crises rather than a true (compared to a strong currency) store of value.

It also implies that the Fed is expected to win its ware against inflation. Another potential explanation is that they are being sold to financed short squeezes taking place as the market dips, which might indicate a baby with the bath water cycle and a potential buying opportunity.

No recommendations here, just thought it was an interesting anomaly.

Jeff

6 Likes
2

No recommendations here, just thought it was an interesting anomaly.

Another interesting anomaly is that, in the retail market, there are very high premiums to spot price of both metals. High premiums in a supposedly weak market…something’s skewed.

In a volatile market one of the outcomes is usually a ‘flight to safety’ into US Treasuries. Yet the yield on the 10 yr bond is rising, which means people are selling.

No shortage of anomalies.

Poz

2 Likes
3

Yet the yield on the 10 yr bond is rising, which means people are selling.

The FED is retiring some of them. So while people are selling and the yield is rising it is relative. As the FED retiring some of them puts pressure on supply keeping some of the value in the marketplace. That changes the impact of the yields in the economy. The USD having appreciated.