The Fed is set to meet on Wednesday next week and speculation is growing that silver will surge on falling real yields. The logic is that the SVB crisis will send yields lower on less aggressive Fed rate expectations, but with inflation remaining relatively elevated, real yields should tumble. This would send silver and gold higher as falling yields and a falling USD are normally positive factors for gold and silver gains.
Furthermore, the gold/silver ratio is at very high levels which can mean silver’s relative outperformance to gold. See here for more info on using the gold/silver ratio.
So, with the Fed meeting ahead note that silver tends to gain from an event studies perspective. Will we see silver gains ahead?
Major Trade Risks: The major trade risk here is that the USD sees bids if the risk tone turns very negative. Alternatively, a very high US CPI print could also send US yields higher.
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