Silver Shambala

One would almost need to be a Buddhist monk in the kingdom of Shambala to fully appreciate just how out of favor precious metals and miners have been, overall, with both retail and institutions for years on end despite every macro reason to be bullish. 

Alas, we must deal with the market here in the real word. And even though gold has been on a tear for last few quarters, sentiment never really became widespread bullish and excited. And we also have seen silver sputter on several occasions into various rally attempts. 

However, with geopolitical tensions escalating across the globe over the weekend we have commodities stealing the show so far in today's session to kick off the new month. Oil, natty gas, and assorted other commodities and commodity stocks are rallying. 

But silver is stealing the show, as are the silver miners in the SIL and SILJ ETFs--It is not just the percentage gain, either. Instead, I am referring to the symmetrical triangle breakout on the SLV daily chart, below, for the silver metal ETF. We have profiled this setup previously, both here and with Members, as the triangle expanded and kept morphing in a larger one. 

The pertinent issue going forward, beyond the obvious point of whether the breakouts hold, is whether the geopolitical escalations amount to the spark which ignites the next higher in a commodity-driven bull market. The historical analogy, against the backdrop of entrenched inflation, would be the Arab Oil Embargo of 1973-1974, coinciding with a bear market in most equities.

Of course, oil and gold were the best performing assets during that decade as rates wart higher. And that illustrates that the deflationist mantra that rates and commodities simply must go down in a bear market/recession is not always correct.