I will be on Brothers on the Wall tomorrow (07.02.2016) to recap a bizarre and turbulent week in the global economy. Beginning at 7:00pm on Blog Talk Radio I will be covering the Brexit fallout and the voracious rally in global stock markets this week – the most impressive in two years and the worst week in history for the VIX volatility index. Central bank stimulus, Deutsche Bank, financial stock repurchases, Italian bank bailouts, and geopolitical ramifications will all be discussed. But there is one absolutely critical thing that happened this week that I have been anticipating for over a year: a breakout above $18 in silver.
Silver is now the best performing asset over the past week and the past month and is surpassed on the year only by sugar and orange juice.
After the Brexit vote I remarked that silver had lagged the initial move up in gold but that I expected it to catch up and begin leading after stabilizing above $18. The move was slightly different than I had anticipated because instead of a longer consolidation after $18 was breached and held once it was off to the races with silver getting withing spitting distance of $20 at the highs today. I would expect it to be more difficult to clear resistance there, and we may even visit the $18 area again if the cartel has their way and the real buyers of physical metal are content to continue being patient and scooping up the metal. Short term price action aside: the bull market is on.
My expectation is for new all time highs to be reached in less than a year’s time, and there’s plenty of room to run before that happens. However, because of the price suppression and foolhardy levered shorts that ground can be closed rather quickly following changes in sentiment. I recommend acting while you can still take delivery, and with equity indexes near all time highs you have been given an incredible gift if you are still in stocks to trade some of that ultimately worthless fiat currency in for real money before the bandwagon really starts.
It still surprises me that virtually nobody is paying attention to this, but the performance will begin to speak for itself before too long. There’s still time to get on the right side of this trade and take possession of physical silver, but I can’t guarantee how long that window will be open.
At this point in time the stock market is not a reliable indicator of economic health for several reasons that I will highlight tomorrow. Keeping an eye on the bond market and precious metals gives you a clearer picture of what is going on in a world where stock prices reflect central bank intervention and headline reading momentum algorithms rather than fundamental value and price discovery.
Listen in tomorrow evening and feel free to get in touch by sending an email to email@example.com.