I am guilty of turning mildly positive on the outlook for silver and gold during the latter
part of last autumn. The idea was that these prominent PMs could rally cyclically on a
global upturn in real economic output growth and a degree of acceleration in the inflation
rate. Since mid - Nov., when the last silver post hit the blog, both metals are up about 5%.
These are doggy moves given the volatility in these markets and primarily reflect recent
issues concerning US economic growth (bad winter weather) and the outlook for China's
economy as It again starts to struggle with super high debt leverage. The inflation rate has
picked up some in the US and soon we'll see how much bounce back there is in the economy
now that the weather has finally turned more seasonable for the eastern two thirds of the
So, I think it is too early to toss in the towel on a cyclical pick up in the PM markets
until there is a better fix on the global economy as the US comes out of a nasty winter.
The chart for silver (with the gold price in the top panel) shows that silver has finally risen
above its 40 wk m/a, but has a way to go before a stronger positive reversal signal would
be at hand. $Silver
Also, here is a link to the 11/17/13 post on silver which provides additional background.
Somewhat parenthetically, advisors and other bloggers have started to rhapsodize on the
idea that the Chinese are big buyers of gold with the implication that this is very bullish for
the metal. Please! When there are big buyers in a market, there are plenty of sellers. Since
the sellers have been letting gold go easily, there needs to be a more persuasive argument
than demand from one segment of the market to entice us. No?
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!