How Gold Silver Compare Against Other Assets Following This Years Rally | Arcadia Economics

So take out the market QQQ and silver is number one for cumulative return and gold is number one for best sharp ratio. We’re number one, all right guys? So let’s start acting it. We’re making we’re making some money now and we’re the right way. Welcome to the Morning Markets and Metals with Vince Lancy where each day he brings you the precious metals in financial news to get you ready for your day and now here’s Vince. Good morning everyone. I’m Vince Lancy and today’s market rundown we’re going to talk about Goldman’s new commodity investment theme.

It’s actually quite good. We’ll also cover gold and silver as actual investments apples to apples compared to stocks and why finally and why you never trust major indexes for your rates of return and then we’ll take a look at the markets. The dollar is down 20 at 104.91. Ten year yields are 4.59 down two a breather. S&P 500 is down six at 52.47. Lower again the VIX is 14.45 firm. Gold is vacillating around on change at 23.37 but silver is 31.35 down 60 cents. Copper is down as well at 4.63 down 11 cents.

So I would think this is somehow China-based and industrial-based and in sympathy with stocks. Throw this out. There are people out there that really lean into the silver stock relationship as a hedge and when stocks are weak they will sell silver. So if you sell silver because stocks are weak if you sell you might buy gold against it. You also might sell silver to buy gold simply because silver has really come very far in a short period of time and that ratio may be attracting some bottom fishers. Just keep that in mind.

It’s not the end of the world but what you would like to see is gold to hold silver up not silver to drag gold down and I think the days of silver dragging gold down are long gone. Now we need gold to pop silver higher. Silver is precious. It goes up. Anyway WTI is down 3 cents at 79.63. Natural gas is 244 up 2 cents. Bitcoin is up 276 at 67 spot 800. Ethereum 37.39 weakening down 23. Platinum plating both down. That makes sense. At 9.44 down 13 dollars and platinum 10.33 down 2 dollars.

So there you have it. Your industrial metals are down. I have to look at zinc and aluminum and what have you but I’ve seen enough to know that you know that’s pretty much the case. Grains are mixed. Soybeans unchanged. Corn is down 1 at 445 and wheat is 693 down 8. Okay so you’ve got a combination in these markets today. This theme today would be for whatever reason while bond yields have been creeping up bonds have been poorly absorbed in the marketplace and that is in combination with other things affecting stock prices.

You know you had consumer confidence was really good. When you take everything and you throw it into a blender the market the sophisticated players are figuring out that there’s not going to be a rate cut. We have barely less than one rate cut discounted in before the end of the year. So assume no rate cut. Assume that hurts stocks somewhat. Assume that hurts bonds worse and assume that keeps a lid on rallies in commodities but it does not kill the secular bull that is the commodity market. Anyway all right so let’s move on to Goldman’s 5Ds.

Oh there’s the front page. Well this was going to be our lead story but we just put it out there. We wrote a little post there based on research that we got very news oriented post. UBS raises silver price target $4 to $36 an ounce. Now mind you I think they were at like 27 a year and a half ago. They cite robust industrial demand and market owner supply. I say this to you as precious metals aficionados. They’re going to start saying and I’m not knocking UBS they’re actually very good precious metals firm but they’re going to start saying what we’ve been seeing for a long period of time and they’re going to start saying it because it’s true.

It always has been true but now the client base is noticing it and the client base is noticing it. That means you have a grassroots demand. They’re not leading the clients down this road. The clients are demanding more coverage of it. This is very very bullish in general. Rabobank, Michael Avery converted to your Keynesian. He’s starting to sound like when will gold and silver miners start believing in their product. That’s from monies and metal. That’s a that’s a nice little article there and there’s our post from yesterday about Michael Oliver don’t selling too soon or two days ago.

All right to the main topic. Goldman’s five D’s. No jokes guys. All right they put out a report primarily focused on Europe which we got today. I mean we get these stuff with these things before anyone we get lucky on these and we thank our source for that and in embedded in this European morning report there was a comment about commodities that we that we thought was interesting. So let’s share a little bit of that with you. We remain selectively bullish commodities and expect commodity total returns to rise from 13 percent year to date to 18 percent by year end.

We see the five D bull market trends will create structural opportunities in commodities. Those five D’s are disinvestment, decarbonization, and climate change, de-risking, data centers, and defense spending. There you go. I mean that’s actually very good. Disinvestment. People are taking their money out of financials which are stocks. Decarbonization. Can you think of anything more decarbonizing than silver? De-risking. That’s the hedging. People are hedging risk. So if you’re a central bank you’re hedging fiat. If you’re a person who’s long bonds you’re hedging long bonds by buying gold. Data centers and AI.

Well they’re kind of lumping that in there but sure silver and copper are key to that but you know you can’t underestimate it. The bottom line is the world just needs physicality is on the rise to support all these new ideas that we have and defense spending. Who knows how much silver goes into a missile. All right. We have that at the bottom. It includes refreshed price targets for gold, oil, and copper. I won’t tell you the numbers but I will share with you. If you don’t know already gold has about 15 percent more upside for them.

Oil, they look at it to be in a range or about in the middle of that range now but it has a lot of upside in it and I think that upside is going to happen and copper another 15 percent to the upside in LME terms which means in COMEX terms it could be 30 percent and that continues at the bottom. All right. Moving on. Rates of return and risk. I have a mutual friend on on ex Twitter for those of you that don’t like the increasingly interesting charts. His name is Semper Vigilante kind of like Bond Vigilante.

Anyway, always faithful. He brings a traditional financial analytical skew to his work and he throws a lot of good content up there and it’s very monolithic. He’s focused on you know the prize silver and gold you know and then he relates them to other assets and of course there’s some humor in there that’s close to my heart but I’m going to show you two charts of his. The reason I’m showing them to you aside from the fact that the data is good the presentation is good is because they caught me by surprise which tells me how much even I you know one of the faithful have been influenced by the outside forces.

So here’s the first one. Sharp ratio of stocks bonds and gold from 2019 to 2024. Now maybe the colors don’t show up because of the black background that well but QQQ is in first place with a sharp ratio of 0.89 and second place is GLD. Don’t even look for silver but it’s in there right but it’s in the top five that’s what’s interesting about it. QQQ is in first place okay GLD is in second the SPY is in third SLV is in fourth JP Morgan is in fifth ARC is in sixth KRE is in seventh looks like ISO is in eighth Disney’s in ninth and way all at the at the right extremely negative is TLT.

Now if you’re not familiar with sharp ratios sharp ratios are a ratio of uh return on your money versus risk and the risk is measured by volatility. So on any given day a stock can have a lot of move back and forth but over the long run it makes money. So to have a high to have a high sharp ratio is to imply a good rate of return with low volatility. Now there’s imperfections with that measure but it’s a standard and it’s a very important standard uh for measuring stocks and I like the faculties including commodities in there uh to do that.

That was surprising that was very surprising was surprising that silver was number four okay so if you’re looking at risk return only QQQ was higher than GLD. Now because there is no risk we’ll come to that right now. Looking at just raw returns from 2019 to 2024 QQQ is 162 percent SLV is 113.7 percent SPY is 91.1 JP is using examples of you know prime players in industries JP Morgan GLD comes in at 75.27 percent and on down the line and of course you’ve got at the very right hand side you’ve got FXY.

Now this is also interesting because before I looked at this I expected SLV to be where it was and I expected QQQ to be where it was. Now you know I pay attention to these things but when you look at this and you look at here’s a meta comment for you if QQQ is the highest rate of return NASDAQ stocks tech stocks and you say I’m not surprised at that and SLV is the second highest and you say oh that’s pretty cool but it makes sense because SLV is very volatile but then you go back to that previous chart and you say wait a minute QQQ is not only the highest rate of return but it’s also the highest risk adjusted rate of return well then that’s bullshit and that shows you that there’s a fed put out there.

How could tech stocks have the lowest volatility given their rate of return? You follow? The whole number is number two so take out the market QQQ and silver is number one for cumulative return and gold is number one for best sharp ratio. We’re number one all right guys so let’s start acting it we’re making we’re making some money now and we’re the right way anyway his name uh his his he has a sub stack I haven’t done this before but I’m doing for the first time Semper Vigilant one I guess the one is for the eye on sub stack I’m not sure what kind of content he puts there yet but I’m going to reach out to him today and here he is on Twitter so he’s criminally under followed for his uh race charts and uh if you can understand his humor if you’re older it’s hard to understand humor like that but he knows what he’s saying.

All right moving on market news all right I want to you know market use market news BHP has dropped their bid ConocoPhillips is merging with Marathon Oil there’s going to be more of that in the oil industry uh the Cleveland Federal Reserve has appointed another talking head to replace their previous talking head who has something like 30 years experience at Goldman Sachs you know surprise the revolving door and uh this one sales force shares plummeted as much as 17% in extended trading on Wednesday after the cloud software vendor reported weaker than expected revenue and issued guidance that trailed Wall Street’s expectation source CNBC why am I paying attention to this because on August 24th of 2020 uh let me bring this up a little bit so I can see the dates right here there’s.

August there’s 2020 August 24th there’s a guy on Twitter I forget his uh uh buco you know the Sopranos character he’s he seems to be a well well-versed macro guy anyway he noticed uh that the sales force was put into the uh was the SMP or the DAO I think it was the DAO put into the DAO uh on August 24th replacing Exxon and there in that little rectangle there that’s Exxon being pulled out of the uh industrial average and replaced by sales force some ethereal you know job placement monster dot com broker and there you can see what happened the moral of the story is indexes lie okay all indexes do to keep themselves at the top right is they replace the user they’re always firing the worst employee okay and replacing it with the highest the highest performing employee which is how you run a business.

Sometimes the problem is when you do that with stocks all you’re doing is selling low and buying high selling low and buying high so the reason the SMP 500 one of the reasons indices keep going up is because they constantly replace the lowest performing one with the highest performing one so that may be okay as a representation of market leadership but it’s not okay as a representation of who merits being in the index or not okay so indices are kind of bullshit um geopolitics we’re going to skip those for now uh light day we have GDP today which should be interesting and continuing again at bottom we have two reports we have we have goldman’s report that we just discussed and we also have uh the daily report from ing on commodities and uh we find that their comment about precious metals is very uh confirming of what we’re all suspecting out there.

And that is that what happens in china affects our markets more and more and you’re seeing it in base metals and precious metals mostly uh i’m vince uh let’s check back on the market so i’ll give you a little screenshot there there’s the gold monthly uh gold’s down a buck silver’s down 62 cents stocks are weaker have a great day see you tomorrow thanks for watching this morning’s markets and metals update with vince lancey brought to you each day by miles frank and precious metals where this week’s special is 2023 dated one ounce silver cougarands from the south african mint for only three dollars and ten cents over spot and even with the price rallying fortunately the premiums are still on the lower side and to get a full price list or place an order for silver cougarands at three dollars and ten cents over spot just email us at arcadia at miles franklin and we’ll be happy to get you set up with anything you need and as always thanks for watching hope you’re having this video is not intended as legal licensed financial trading advice and is to be used for informational purposes only please contact your financial advisor before making any decisions and thanks for watching
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