Silver doesn't look good in the short term, but if you're not trading #silver but investing in the sector, be aware of the possible paths that yields and inflation can take from here. A quick thread.🧵 Silver is basically like buying tips.(1/7) 
(2/7) Look at the near perfect correlation. Tips are the inverse of real yields, which is the current nominal yield minus inflation expectations. Silver and gold love negative real yields and hate the opposite. Real yields are on the rise right now.
(3/7) The FED is showing their theeth and the economy goes off the cliff. Therefore, the market is currently lowering inflation expectations due to an impending recession, but yields are being driven higher by the aggressive Fed talk.
(4/7) So the market believes the Fed will relentlessly tighten monetary policy despite falling inflation and a recession. That may continue for a while, but if you look at what not only the monetary policy side is doing, but also the fiscal policy side, things become pretty clear
(5/7) A couple of weeks ago, the Senate passed a nearly half-billion-dollar stimulus bill (the Inflation Control Act) and announced that it would cut student loans by $10,000. How is this going to be funded? The FED doesn't just want to stop buying bonds, it wants to dump them!
(6/7)This at a time when (international) investors are selling their U.S. Treasury bonds like never before. Good luck with that. Tightening monetary policy in a recession will only make the reverse even harder. A lot can break between now and then.
(7/7) But with a time horizon of more than a year, we have already reached extremely attractive levels for pm investments.
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