A break-down will be a waving flag for recession risk
This highly pertinent chart from the latest GoldNuggets Digest report shows what is basically the forgotten precious metal…
With silver $Silver - main 2503(SImain)$ surging and gold $Gold - main 2504(GCmain)$ going for it, $Platinum - main 2504(PLmain)$ ’s been patient — stuck in the range, coiling into a triangle formation; waiting for its turn to breakout. And this is where it gets interesting:
“I often describe silver as a combination of precious metal and industrial metal, and platinum is the same… but the weighting to industrial metal is even higher. So we probably need to see global growth sentiment heat up a bit more for this one to breakout (which also makes it less of a defensive asset, more of a cyclical).“
This is pretty much exactly what I’ve outlined above, the odds of an inflation resurgence are steadily rising, and commodities are going to be a key beneficiary of that. So from an asset allocation standpoint commodities are as much a lever to boost returns as they are a hedge against the dark side of inflation resurgence (rates and bond yields may undertake a sharp rise, stocks encounter turbulence as a result).
Practically speaking, a breakout to the upside of the triangle formation in the chart below will essentially confirm growth reacceleration + inflation resurgence, while a break-down will be a waving flag for recession risk.
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