Global Macro Commentary

My core view is that PMs will finally break out to new highs over the next few months. Many people are expecting a further correction to August levels, but I think that is wishful thinking. If PMs are indeed headed for all time highs, they must not lose their current momentum – a further correction to August levels would impair the momentum that is required for the final push, especially considering that we are currently in a favorable season for PMs.

Silver 9-month

Silver technicals: 16 is a MAJOR level for silver (see my 8/13 post) and is currently the last line of defense. Silver dipped below 16 overnight but managed to close above it, forming a long doji. Looking at the 1-month chart of silver below, there is a potential head and shoulders topping pattern – I think this will turn out to be a significant bear trap.

Silver 1-month

USD: the chart below is a friendly reminder to DON’T FIGHT THE TREND. There’s been a lot of coordinated USD jawboning as of late, but I think this is merely an attempt to smooth out an otherwise obvious (and beneficial) collapse of the USD. As for the yawning inflation v. deflation debate, the answer is simply in the data; I’m not even going to bother explaining this. Bill Gross recently rebalanced PIMCO’s portfolio to almost 50% in long dated US bonds, betting that deflation in the US will persist – I can hear Jeff Van Gundy commentating in the background: are you kidding me?! Can’t wait for the NBA season to start :)

USD: 9-month