Yesterday, I noted that the biggest risk for silver could stem from risk-off movements in financial markets.
After monitoring silver prices for 25 years, I've observed that they generally plummet under such conditions.
However, recent events suggest a significant shift: following news of Israel's retaliatory strike on Iran, while stock futures dipped by 2%, silver prices unexpectedly rose by 2%.
This marked 4% divergence indicates that silver may now be perceived as a safe-haven asset, substantially reducing its downside risks
The coming week is shaping up to be crucial for both Bitcoin and Silver. Recently, silver seems to have transitioned from a risky to a safer investment option (see below).
I say "seems" intentionally, as we've sometimes been misled by Bitcoin, which appeared to change its correlations with the stock market before, only to revert back.
In March 2023, Bitcoin's correlation shifted from positive to negative. This period was marked by the unexpected downfall of Silicon Valley Bank and Signature Bank. The ensuing banking crisis, caused by massive withdrawals and financial unrest, led to global market turmoil and required government intervention to restore stability. Notably, Bitcoin's value rose by 11.1% within six weeks, while the S&P 500 fell by 6.3%, as shown in the chart. Unfortunately, this period was short-lived. Many might remember the viral chart from @TaviCosta this week, suggesting that Bitcoin is merely a threefold leverage of the Nasdaq. While this has been the case in recent years, it's uncertain whether this trend will continue. Changes seem to be on the horizon.
This week, NVIDIA, a leading AI stock, saw its biggest drop in 49 months (!) —a rarity during Nasdaq bull markets. Is the end of the bull market near? This decline of NVIDIA, coupled with Bitcoin's surge to over $65,000—a reaction to the recent halving of miner yields and its highest value in the past six days—along with silver reaching its peak closing price of the year, underscores a significant divergence of these assets from traditional stock market trends.
In summary, the upcoming week will be pivotal for both Bitcoin and silver, as this could be the moment when their correlations with the stock markets change forever.
