The rally in silver may have locked in a bear market for the U.S. dollar, reports Ashraf Laidi.
Silver's explosion to seven-year highs scores a big point in favor of the reflationary trade, which consists of ascending commodities, resilient equity indices and a falling U.S. dollar.
I have often said that rallying silver was the remaining, necessary card in the falling house of the U.S. dollar. In order for the USD decline to transition from corrective phase to a secular bear market, silver must break out of its $20 ceiling as it is more of an industrial commodity than gold.
What about Copper? Silver's reflationary status is also shared by copper—known as the PhD in Economics for its close relation with the economic cycle — but silver is considered as macro-driven as well as more speculative in nature. The reflation trade may get more wind in its sail if U.S. crude oil (WTI) closes above $42, which it currently seems to do.
Equity traders shift to this Thursday’s earnings from Tesla (TSLA) and Microsoft (MSFT), with an eye on number of deliveries and the extent of earnings losses for the former, and cloud services sales for the latter.
You can see Ashraf’s daily analysis at www.AshrafLaidi.com and sign up for the Premium Insights. Ashraf discussed Trends in Yield Differentials at the TradersEXPO New York on March 8.
