The Fed Is Trapped – “the beginning of a secular bull market for precious metals”

Crescat Capital have just released their February research letter and it’s a cracker. Below is the author’s Tweeted summary from last week to put this current turn in the market succinctly into perspective and why they think gold and silver are about to enter a new secular bull market.

https://www.ainsliebullion.com.au/gold-silver-bullion-news/the-fed-is-trapped-e2-80-93-e2-80-9cthe-beginning-of-a-secular-bull-market-for-precious-metals-e2-80-9d/tabid/88/a/2456/default.aspx

One year ago we had the first big financial market sell off on the back of COVID hitting ‘the west’ and the realization this thing was big. Last night saw the worst equities & bonds rout since March. 113m cases, 2.5m deaths and much of the world in lock down at various times and we finally have a vaccine and ‘hope’ creeping back into the market, winding up the spring, albeit arguably prematurely. But could that ‘sprung coil’ be the undoing?

AUD kisses 80c – What comes next?

Last night saw a rebound on Wall Street despite falls on opening after the Fed doubled down on its dovish jawboning. That saw a reprieve in bond yields, shares up, gold down and further strengthening in silver and platinum on the reflation trade. It also of course saw the USD down and the AUD firming to kiss 80c. We discuss the implications.

Another day another Wall St heavyweight warning of the ‘everything bubble’ looking extreme. The head of the world’s largest hedge fund, Ray Dalio, shared his ‘bubble indicator’ yesterday, giving an insight into how Bridgewater assess this current extreme situation.

Why Rising Rates are the Pin for this Bubble

In a bubble looking for a pin, maybe the biggest threat (pin) developing is the rise in yields or interest rates as we discussed in part on Friday. We share and discuss a typically concise and easy to understand explanation from Lance Roberts of Real Investment Advice on the troubles ahead.

The ‘everything bubble’ is starting to look increasingly shakey. Last night, literally everything except platinum, which seems bullet proof at present, was sold off… everything. Even the Bitcoin rocket briefly levelled out but admittedly Ethereum surged again to new highs. Whether cause or effect, that of course included US Treasuries which saw 10yr yields rise above 1.3% and into territory that is becoming scary for this bubble. We discuss the implications.

The last couple of weeks have been extraordinary for silver, starting with the #silversqueeze movement which saw unprecedented sales of both physical silver and silver ETF shares and the accompanying massive spike of silver being delivered to the vaults backing these shares. Today we talk to the accompanying squeeze in supply and a stark warning from the world’s biggest silver ETF. It’s a must read for silver investors or those considering it.

The crypto market went through a “shake out” event yesterday, dropping 7% from its new record high. Despite this rapid fall, institutions seem confident about the cryptocurrency’s long-term prospects.

Another day, another record. For the first time in history the US sharemarket is valued, or more accurately*, priced, at twice the US economy measured by GDP. * Remember price is what you pay, value is what you get. Don’t get the 2 confused.

Gold rose last night despite weaker than expected inflation data out of the US which saw the USD continue its slide and bond yields dip even further as expectations of even more monetary stimulus were essentially locked in. Bonds yields dropped but the incredible news is the extent to which the junkiest of junk has reached new records. What does this portend?