I am writing this post mostly for myself, in order to return to it in 1-2 years, and evaluate how much I was right in my reasoning.
As I said earlier, this year I focus on raw materials, to a greater extent on precious metals, namely silver. Let me explain why:
1) The ratio of commodities to the world’s most benchmark stock index, the S&P 500, is at its lowest levels since 1970:
As history shows, a long-term cycle of commodity growth follows.
2) The overall valuation of bonds that are currently trading with negative yield to maturity exceeds $ 16.5 trillion. The trend is upward. This fact is a support for precious metals.
3) The printing press in the United States is working in an enhanced mode, only this year the money supply in $ increased by more than 20%, and most likely it will continue to grow at a rapid pace! At the same time, the federal budget deficit is growing, a vicious circle. By the way, if you pay attention, there is a correlation between the dynamics of the deficit / surplus of the US federal budget (red line on the chart) with gold, as the deficit increases, gold begins to rise
4) if we talk about gold, over the past three years there have been no new large deposits (> 2M of troy ounces). That is, the supply of physical gold is not increasing.
5) Gold adjusted for inflation. There is room to grow
6) Twin Deficits (inverted chart) VS Ratio Gold / SP500
7) Why silver and not gold? The GOLD / SILVER ratio is rather at the upper border, there is room for silver to grow in relation to gold. As a rule, the direction of these metals is one, but silver is more volatile, which will allow you to earn more
8) Silver in relation to the money supply
9) Silver to Equities Ratio
10) Upward cycles for silver, compared to the previous ones, we are only at the beginning of the path ..
11) Precious metals have an inverse correlation with the $ (DXY) index. A repeat of the 2000s is possible
12) and for filling … This year, alternative energy, namely solar, is in special demand. ETF focused on this segment is a confirmation of this (ticker TAN). By the way, there is a correlation between this ETF and silver, due to the fact that investments in solar energy account for about 18% of industrial demand for silver.
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