US rate cut boosts silver to all-time highs; watch platinum
After a contentious Fed meet on Wednesday, the final monetary decision was a 25 bps cut. The new band level is set at 3.5-3.75%.
Why contentious? Simply because there was no unanimous decision on: first, the direction of the policy rate and, second, the magnitude of the move. The result is compromised quarter-point cut.
What is interesting from the meeting is the updated ‘dot plot’.
Here the picture is clearer. Many FOMC members see the potential for further rate cuts in 2026, with some projections sinking below the 3 percent level (see below).
Lower interest rates, generally speaking, is good for the overall economy since it reduces the cost of borrowings, such as mortgage payments. As the cost of capital falls, the capacity to borrow, spend and invest increases.
A dovish monetary policy also boost the attractiveness of non-dividend assets such as gold and silver.
I have written about silver a couple of times in the recent past. The latest FOMC rate cut yesterday propelled silver prices to new all-time highs.
As the new leader in the precious metal sector, silver’s near-term target is at $65.
Should we chase silver now? Short-term overbought, going all-in now on a highly leveraged basis entails poor risk-reward ratios. If long, stay so, and raise stops. For investment, watch to buy more on setbacks.
A similar tactic may be applied to silver-related equities (see, eg Global X Silver Miners, ticker:SIL). Many miners have rebounded sharply on silver’s new northward run. Stay long and raise stops.
Another interesting pick could be platinum.
The metal, labelled ‘Pt’ in the periodic table, is testing the near-term overhead resistance at $1,700. A small, exploratory long may be taken here to bet on an eventual upside breakout.
