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(Source: TC2000.com)
Many assets have responded well to high inflation readings over the past year, with the S&P-500 (SPY) being one of them, up over 20% year-to-date. However, the supposed inflation hedges, precious metals, have been unable to hold their ground and continue to sink year-to-date. This has certainly made the precious metals a frustrating trade, and the only good news to come of this frustration is that it’s left bullish sentiment readings near multi-year lows. As the chart below shows, sentiment has not been this bad for the precious metals sector since March 2020 (except for September 2021), and extreme pessimism often breeds major rallies. Looking back to March 2020, silver was up more than 100% in less than six months. In the most recent instance, the metal gained 18% in less than two months, but has since given up most of these gains.
