GoldNuggets — Silver Star
GoldNuggets Digest: silver price breakout, precious metal prices, silver price historical perspective, Europe defense spending, gold vs other commodities...
Silver Breakout
At the time of writing silver $Silver - main 2509(SImain)$ is soaring and is within inches of taking out the $40-level. If I had to guess, given the strong momentum on display here and compelling looking breakout, it probably does get a 40-handle soon (albeit do note that sentiment is getting hot).
Precious Metal Prices
And to zoom out a little, here’s some interesting context on catch-up potential for silver (and Platinum; which is also surging). With gold $Gold - main 2508(GCmain)$ stalling out, I think it’s fair to say the commodity rotation theme I’ve been talking about recently is in full-swing.
Silver in Context
But before you get too excited, heed some wise words from Peter L Brandt: “Silver is the Mother of All Cup and Handles — But Silver never makes it easy folks -- lots of rug pulls along the way. This is why Silver along with Nat Gas are known as the "Widow Makers".“
In other words, it can come back down just as fast as it goes up, so just be mindful of that in terms of risk management.
European Defense Sector Capex
I thought this one was interesting and worthy of including because it is so topical right now (European defense spending ramp up in support of Ukraine, but also in support of themselves as the US withdraws from its past role as chief defender of the free world) — and in part because it reflects how geopolitical risk is at the highest level in decades… which has been a key support for precious metals.
But also, it’s part of a wider uplift in thematic capex I’ve been tracking that is set to impart major tailwinds on industrial metals and a whole slew of other commodities. Capex go up = commodities go up.
Gold vs Commodities
And speaking of commodities, I wanted to reshare a chart from a note I wrote last week because I think this is really important. Gold might yet have further to run, but at this point the best risk/reward is in other commodities [in this case I am talking about a basket of commodities e.g. specifically for this indicator, the GSCI light-energy index].
As noted in last week’s edition, it’s time for commodities to play catch-up.
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