In a market where equities are outshining every asset class, investors wonder whether there’s any other asset class that can share the limelight. The Fed’s rate cut should have raised alarm bells, instead market participants are partying hard. The narrative is that money is easy, India is an outlier, and equities are failsafe.
A large and pre-emptive rate cut actually is telling of another economic tale. One that cautions of a recession in the US. It is a story of a heavy interest burden. That too one that won’t abate even after the US Presidential elections are behind us. Why look at the NASDAQ or Dow, when the US ten year treasury moved marginally upwards after the Fed cut rates by 0.50%. This is also a tale that masks the delicate balance between the US dollar and other global currencies.
When the market realizes that things are nowhere as rosy as they seem, where will the money flow? The dollar will be only one of the safe haven choices. Central banks have already made a clear choice in stocking up on gold reserves. So far, silver stands without any narrative as the best performing asset class of 2024. The demand for silver as an industrial metal and in the semiconductor industry will go up.
Clearly, the question is not whether metals will shine, but when and for how long.