Last week the FOMC minutes showed that the Fed now saw a US recession for 2023 as pretty much a ‘base case’. This was a surprise revelation and allowed markets to sell the USD in the expectation that the Fed will be less aggressive in hiking rates now. Markets now only expect a 50bps hike at the Fed’s December meeting. Before the Fed meets there are a couple of crucial economic data points: US PCE and NFP this week.

So, if we see a miss on the US PCE data or a miss on the NFP data, then the market will start to expect a dovish Fed on Dec 14. If all that moves that way the USD will likely fall lower, and real yields drop, and that should set a fire under silver.

Silver has some great seasonals ahead too. Over the last 25 years, between December 14 and February 20 silver has gained 80% of those times for an average return of 7.84%. From a seasonal perspective, this offers one of the best times to enter the silver market.

Major Trade Risks: The major trade risk here is that the Fed keeps hiking aggressively, US inflation keeps rising, yields increase and all of these factors are a natural headwind for silver.

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