In case you have not spoken to anyone recently and this is the first thing you have read in a fortnight, silver has been on a complete tear over the past two weeks. It topped up a near linear 20% run Friday in a truncated trading day.
As such there has been an rush of media coverage and since financial journalist like to attach reasons, founded or otherwise, to the price moves of everything the general consensus reached was “inflation fears.” In past week FT Lex, WSJ, NYT, AP, the Guardian, CBS, and NBC along with many other news organizations ran articles placing the blame for the run up in precious metals squarely on the shoulders of “inflation fears.” Reading this line repeated over and it reminded me of my favorite quote from Nice Guy Eddie in Reservoir Dogs: “If you fucking beat this prick long enough, he’ll tell you he started the goddamn Chicago fire, now that don’t necessarily make it fucking so!”
Now I am not a precious metals expert by any means, but writing that price moves in metals are based on inflationary fears, over and over again doesn’t make it so. Apparently these writers and their editors are unaware that the domestic inflation outlook is an easily quantifiable and also is readily available set of numbers. They’re called breakeven inflation rates and amazingly they are quoted in real time every day the market is open.
Here is how the 10 year breakeven has fared during the 20% run up in silver over the past two weeks.
Choppy and bit downward. Same goes across the curve from the 2yr to the 30.
That said, journalists, analysts, letter writers, et cetera: please find another explanation that is not so easily debunked. If you are in a pinch just blame JP Morgan, the tinfoil hat legions love that one.