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Fundamentals

The 30-Year Bond interest rate is rising to 2.162 percent, an increase of more than 2%. The 10-Year Note is now trading at 1.859, up 4.9 percent. Interest rates are rising, especially at the low end of the market. The 10-Year Note is inverted, which means that short-term interest rates are rising faster than long-term interest rates. 

Chairman Powell is talking about tapering and says the Fed would consider interest rate rises in the future to combat inflation. The Dow Jones is down 500 points, the Nasdaq is down 264 points, and the S&P is down, indicating that an increase in interest rates is bad for the markets.

“Higher interest rates, or the prospect of them, will dampen the economy.” 

Brent crude oil is now trading at $87 per barrel. WTI is now trading at $84.50. These costs are a stumbling block for the economy. 

It appears more likely that if interest rates rise, it will be done only once, maybe by 25 basis points. The Fed will most likely do the bare minimum to demonstrate its control over the economy, but we already know what the markets will do if interest rates increase.

Already, the markets are on the verge of another meltdown. The Fed does not want the stock market to have a significant correction, therefore it will proceed with caution when raising interest rates. 

When you combine the Omicron factor with China’s lockdown, it adds another drag to the economy. Russia’s threats against Ukraine, as well as escalating tensions with the United States and Western Europe (NATO), only contribute to the world’s economic uncertainties. Russia looks to be preparing an invasion of Ukraine. This might be another black swan occurrence that disrupts the energy markets, which is why crude oil is nearing $90 per barrel. If the Ukraine issue worsens, petroleum may quickly reach more than $95 per barrel.

A confluence of variables is challenging the foundation of supply everywhere. The price of gold and silver might skyrocket. Silver is the canary in the coal mine, and it will most likely go first. Silver is the world’s most undervalued asset. It is evident that the Fed does not have control over inflation, and it is unknown whether this inflation will be transitory or long-term. It is extremely difficult to cut prices once they have been raised. There is a great deal of ambiguity in many areas. 

We appear to be in a period of transition and transformation to a new economic system or level. It looks to be heading towards Bitcoin and digital currency.

It appears that it is just a matter of time until central banks begin to create some type of digital currency. A critical question is whether any digital currency will be supported by anything other than government promises, or if one or more will be backed by gold or a basket of precious metals. China has already taken the lead in digital money, employing an internal digital Yuan. There are numerous uncertainties regarding whether visitors will be able to use it and if they will be able to use it outside of China, but it is evident that China’s central bank is ahead of the game. All they have to say is that it is gold-backed, and they will be well ahead of any other monetary unit.

Silver

We’ve been long silver since it reached $22.81. Silver is breaking out, closing at $23.47, up approximately 55 cents or 2.29 percent. This morning, silver had a significant reversal. Rising interest rates are not a negative for precious metals. The Fed hiked interest rates in December 2016, and gold reached $1517 by July. We have been in a decline since August 2020, but we have now reached a significant low. This is only the start of a massive rebound that will take the price back to the prior highs around $30. Silver is a difficult metal to trade. It’s been difficult if you’ve been holding silver since March 2020. However, we are on the approach of a significant advancement.

As interest rates rise, the precious metals markets will reach a bottom. Silver has broken over the daily VC PMI levels and is now its route to the weekly objective of $23.99. 

Gold is on the rise. We purchased a contract for $1815.20 right before the market opened today. Based on our Variable Changing Price Momentum Indicator, we encouraged all of our traders to take the daily Buy 1 signal at $1813. (VC PMI). Gold reached its initial goal of $1818 before retreating. Gold has triggered a buy trigger, thus we propose adding additional contracts.

Gold

Both gold and silver are on the verge of a significant rise. If gold breaks beyond $1874, the next high would be around $1920. If gold rises over that level, it will challenge $2062. 

Check out our Marketplace service, Mean Reversion Trading, to discover more about how the VC PMI works and to receive weekly data on the E-mini, gold, and silver.