Could the Fed set silver soaring into 2023?
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 expectations 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 meet there is a couple of crucial economies data points; US PCE and NFP this week.
So, if we see a miss on the US PCE data, 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, real yields drop, and that should set a fire under silver.
Silver has some great seasonals ahead too.
Notice how, 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 keep hiking aggressively, US inflation keeps rising, yields increase and all these factors are a natural headwind for silver.
Remember, don’t just trade it, but Seasonax it!