Thin Ice

Hope springs eternal, as the mercury breached 50 this afternoon - luring a crocus or three into the early spring air. Heavens to betsy we may even feel 60 tomorrow. With our new Canadian skin now thickened and calloused from an extra serving of arctic, we have the tempered suspicion that 60 is the new 40 - or something along those lines. After this past winter we'll just consider it a rare silver lining. 

With that said, silver and the precious metals complex at large have continued their listless retracement decline, now in its third week. While silver especially is skating on very thin ice, we still like the sector's prospects as framed by the broader macro story.

Although silver may be standing with ginger footings, the ground beneath the US dollar as well as 10-year yields appear more fragile from our perspective. Moreover, the yen looks ripe to bounce. Considering these relationships and the fact that the VIX also appears on the precipice of another step higher in its long-term range, we still like the gilded hedge.

As in pond hockey, first one to fall through loses by default.

Click to enlarge images