A “Silver” Lining in the Metals Market: Silver Rally Could Bode Well for Both Gold and Silver

While gold dropped last week, silver rallied. Peter Schiff called it a “silver lining” that could indicate we’re near the bottom in the precious metals dip.

Gold and silver have sold off with every inflation surprise to the upside. The markets think persistent inflation means the Fed will get even more aggressive with rate hikes. They fail to realize that the central bank will not bend this inflation curve.

In a recent podcast, Peter said this is a good time to talk about gold and silver “because that’s a better opportunity for the people who are listening to my podcast to buy.”

Gold fell about 2.5% in the wake of last week’s hotter-than-expected CPI data. That was nothing compared to the big plunge in stocks and bonds. But a lot of people think that gold still has a long way to drop. Peter said he doesn’t think so.

I think we are stomping out some of the weaker players, but I still believe the downside risk in gold is minimal.”

Meanwhile, silver rallied and was one of the few things to finish positive on the week.

I think strength in silver is a bit of a silver lining in this cloud. And it could indicate that we are near a bottom in gold and that we are exhausting the sellers.”

Meanwhile, thanks to a rally on Friday, gold stocks held up pretty well, especially compared to tech stocks, and in the face of what many could construe as a breakdown in the metal itself.

So, I think we are banging along the bottom and we may not be on the exact bottom. In fact, even though gold itself made a new 52-week low Friday, gold stocks did not. They have not made a new low. And silver had a nice reversal. So, there are things to hang your hat on if you’re a bull as far as being near the bottom. But again, even if we’re not at the bottom, we’re close enough to it that people should be buying the dip, both in the metal and in the miners.”

Typically, people wait for sales. They buy when prices are low. Following that wisdom, now is the time to buy silver and gold. If you wait for the inevitable rally, it’s too late.

The silver-gold ratio has fallen from over 90-1 to around 85-1. This indicates that silver has closed some of its gap with gold. But from a historical standpoint, the silver-gold ratio still indicates that silver is drastically undersold compared to gold. And we think gold is undersold as well given the high level of inflation and the economic chaos on the horizon.