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Over the years we’ve gravitated towards tracking the nuances in the precious metals sector, because they can be great leading indicators of some of the broader changes in the macro climate.
Today, we continue to closely monitor and weigh the precious metals sector as it forges the leading path higher for the broader commodity space and corners of the market that are tangentially influenced with their respective performance and growth trends. Not surprisingly, the pivot higher in precious metals has also been marked with a trend shift north in the inflation data this year.
Throughout the year we have followed three risk ratio proxies that have illustrated the staggered start that has developed in the markets as the inflation vane has begun blowing steadily out of the south. Leading the way, the precious metals miners – relative to both spot prices and the SPX, made a cyclical low in December of last year and tested those lows coming into June. Similar to the move in silver, the subsequent rally in the miners has been explosive from their respective support zones.