Caught between conflicting forces, will pivot optimism outweigh the economic malaise that should unfold in the months ahead?
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The yellow metal’s pivot dreams could become a reality. But should it be celebrating the economic weakness?
While hopes for a dovish pivot may keep silver from crashing in the short term, history shows that actual pivots are bearish.
Despite material struggles across other areas of the commodities market, the yellow metal remains relatively elevated.
Approach / Strategy
Looking at the Interconnectedness of Markets for the Medium-Term
Alex Demolitor analyzes the movements in the stock, commodity, bond, and FX markets to determine the likely direction of the precious metals. Financial markets are interconnected, and what occurs in one market often cascades across others. Furthermore, gold’s fundamental value is often determined by the performance of the U.S. dollar and real interest rates, which makes it essential to monitor these crosscurrents.
Alex’s investment horizon ranges from one to three months, as the technicals dominate in the short term, while the fundamentals are more potent over the medium term. In addition, specific price levels are not considered. Instead, the goal is to position for events when the risk-reward is attractive. Therefore, as the fundamentals change, the risk-reward changes, and whether or not to enter or exit a position changes as well. So, it’s an evolutionary process that includes continuously analyzing new data.
Alex Demolitor hails from Canada, and is a cross-asset strategist who has extensive macroeconomic experience. He has completed the Chartered Financial Analyst (CFA) program and specializes in predicting the fundamental events that will impact assets in the stock, commodity, bond, and FX markets.