It‘s Only Tech That‘s Sold – Not S&P 500, Gold Or Silver

S&P 500 is getting under modest pressure, and technology is to blame. Is the correction about to turn nasty from sideways? Still, no signs of that, even as the investment-grade corporate bonds are being sold off as hard as long-term Treasuries. Yet, these corporate instruments have only now broken below their late Oct lows – unlike long-dated Treasuries, whose price action resembles free fall.

These government debt instruments are arguably the key asset class for every precious metals investor to watch. What used to be gentle decoupling signs over the latest weeks and months, got thoroughly tested the prior week. Yet, I stood firm in not calling gold down and out. The support zone at late Nov lows generated a rebound that was oh so likely to materialize.

Silver naturally outperformed, both copper and oil had a strong day, and agrifoods are making new highs. The inflation dynamics described in Friday‘s article aptly called Why the Sky Is Not Falling in Precious Metals, continues unabated, and the pressure keeps building inside the metals and commodities.

Not even the dollar managed to benefit from the rising yields – the resumption of its bear market I called on Feb 08, is one of the 2021 themes. Money keeps flowing from the Treasuries market, and there is plenty sitting on the sidelines (corporate or private) to still deploy and power stocks and precious metals higher. Also, those ready to withstand Bitcoin volatility (hello, the weekend Elon Musk tweet follow through), stand to benefit – cryptos are behaving like a store of value, a hedge against currency debasement. I wrote in my very first 2021 analysis that the Bitcoin correction wouldn‘t get far.

Powell‘s testimony is about to bring volatility, but does it have the power to change underlying trends? Not really – while his latest high-profile assessments brought about a downswing, stocks recovered in spite of the GameStop (contagion?) drama too. Should we see a replay of the above, new highs are coming – and they are, in both stocks and precious metals. We‘re in a commodities supercycle on top!

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Monica Kingsley 4 days ago Author's comment

The recovery from pre-Powell tantrum in stocks, gold, and silver goes on - oil agrees and long-term Treasuries are getting a (daily) reprieve. This was just a stop run, not a trend change. No.

Graf Helmuth von Moltke said that no plan survives contact with the enemy. Very right, and we're moving back to pre-Powell trends slowly but surely.