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2023 promises to be quite an interesting year for precious metals investors after a disappointing 2022. According to Craig Hemke, another argument that speaks in favor of an optimistic outlook is the potential easing of China's coronavirus policy.
Starting with the updated COMEX Silver futures price chart for March 2023 delivery. We have watched the price move to the bottom for several months. For most of the year, silver outperformed gold and mining stocks in a deeper decline before it suddenly turned up.
One of the most well-known and reliable technical figures is often called the "Cup with Handle", within which the formation of a bowl-shaped bottom can be tracked over time. Then there is a breakout, but it is followed by a pullback. After that, a figure resembling a tea cup is formed. Do you see something similar in the chart below?
It is thus clear that the COMEX silver price has bottomed out and is now poised for a recovery in 2023 that will primarily be based on the Fed returning to cut interest rates and a possible resumption of quantitative easing.
Another factor to be noted is physical demand in 2023.
Citizens of China are extremely unhappy with the current government policy regarding the coronavirus. This senseless policy has led to a sharp contraction of the Chinese economy and, as a result, to a drop in overall Chinese demand for commodities.
In our 2022 outlook published last January, we expected China to lift lockdown measures, pushing the so-called "credit impulse" to new highs. This, in turn, was to stimulate Chinese demand for all commodities, including silver.
As history shows, gold and silver are rising along with the increase in Chinese credit momentum. From February to November 2020, gold is up 20% and silver is up 70%.
However, China imposed a lockdown in 2022 and the expected surge in the commodity market never happened. But can everything change in 2023?
The above protests may lead to a change in official CCP policy and an easing of restrictions.
On Tuesday, November 29, China's potential easing of Covid-19 restrictions was the driving force behind a range of commodities.
Thus, many of the macro factors that I expected to push COMEX gold and silver prices higher in the second half of 2022 will only come into play in the first half of 2023. momentum.
It has been a tough and challenging year, and the delay in the expected rally in the gold and silver markets has made it even more frustrating. However, this was only a delay. Policy at the level of the central bank and government is changing and we will all soon reap the benefits of a significant increase in precious metals prices in 2023.