Just a quick update as things are moving quite fast in the PMs. They all moved higher today, so you might be wondering if this changes the current outlook or whether it impact the current positions.

In short, I don’t think it changes anything.

The move is too small to change the technical picture, and what is particularly suspicious about it is that silver strongly outperformed gold today. In fact, it even outperformed mining stocks. That’s what tends to happen close to the end of a given upswing. That’s what usually happens when the investment public enters the market.

There is another indication that something like that happened. Namely, the so-called meme stocks (GME, AMC) are soaring. These were the favorites of the investment public (and so was silver – practically at its 2021 top), so it seems that it is indeed this part of the market that is triggering the price increases right now. And since that’s what tends to happen close to tops (again, it already happened in early 2021 in silver, it’s not something new), the current outlook didn’t just become bullish. It remains bearish.

The Friday non-farm payrolls were exceptionally good, which is a fundamental reason for the Fed to keep hawkish for longer (or to hike rates more aggressively), which is a bearish (at least in the short term) factor for PMs. And so, they declined on Friday. However, they had no good short-term reason to rally today. So, it’s likely just an emotional buying frenzy of the investment public.

Consequently, the odds are that today’s rally is just a one-day phenomenon, and even if not, that it will not continue for long.

Therefore, I think that short positions in junior mining stocks remain justified from the risk to reward point of view.

As always, we’ll keep you - our subscribers - informed.

Thank you.

Sincerely,
Przemyslaw Radomski, CFA
Founder, Editor-in-chief