A ‘silver’ lining in the metals market: Silver’s rally could bode well for gold and silver

While gold fell last week, silver rallied. Peter Schiff called it a “silver lining” which could indicate that we are near the bottom of the precious metal decline.

Gold and silver sold off with every upward inflation surprise. Markets believe persistent inflation means the Fed will become even more aggressive with rate hikes. They don’t realize that the central bank won’t bend that inflation curve.

In a recent podcast, Peter said it was a good time to talk about gold and silver “because it’s a better opportunity for people listening to my podcast to buy.”

Gold fell around 2.5% on the back of warmer than expected CPI data from last week. This was nothing compared to the great fall in stocks and bonds. But many people think gold still has a long way to go. Peter said he doesn’t think so.

I think we are avoiding some of the weaker players, but I still believe the downside risk for gold is minimal.

Meanwhile, silver rallied and was one of the few things to end the week positively.

I think silver strength is a bit of a silver lining in that cloud. And this could indicate that we are close to a bottom for gold and that we are exhausting the sellers.

Meanwhile, thanks to a rally on Friday, gold stocks held up pretty well, especially relative to tech stocks, and in the face of what many might interpret as a breakdown in the metal itself.

So I think we’re hitting rock bottom and maybe we’re not exactly rock bottom. In fact, even though gold itself hit a new 52-week low on Friday, gold stocks did not. They haven’t sunk again. And silver had a nice reversal. So, there are things to hang your hat on if you’re a bull as far as you’re near the bottom. But again, even though we’re not at the bottom, we’re close enough that people are buying the drop, both in the metal and in the miners.

Generally, people wait for sales. They buy when prices are low. Following this wisdom, now is the time to buy silver and gold. If you wait for the inevitable rally, it’s too late.

The silver-gold ratio has gone from over 90-1 to around 85-1. This indicates that silver has closed some of its gap with gold. But from a historical perspective, the silver-gold ratio still indicates that silver is significantly undersold relative to gold. And we think gold is also undersold given the high level of inflation and economic chaos on the horizon.

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