$Silvercorp Metals Inc(SVM)$ As shared last week, this week provides more clarity... It's Friday. Do you see it? [Tongue] As expected (though I didn't say), the Fed raised its rate... and the market? Growth stocks, bitcoin led cryptocurrency, precious metals group led by silver flew!? If this is not clarity, what is... It is actually a strange sense of clarity... Like a humour only this human world 🌍 can bring... a dark humour of sorts.
Why do I say that?
Yes, the US Fed raised rate and expects to raise rate 1-2 times more this year. Companies with high borrowing pay more interest at higher rates (looking at you, growth stocks [Glance] [Smug] [Sweats] ) With AI led expenditures by hyperscalers, their corresponding borrowing cost would also increase.
On paper, higher rates means higher costs all around, especially so for those who borrowed the most. Growth companies, cryptocurrency and precious metals group that pay no interest should tank... which they did on the day of the Fed announcement. Those same ones fly soon after!
Yes, the rate raise has perhaps been priced in. So, is it buy after the news?! Nah... It's buy despite the news... To me, the clarity scares me.
Let me explain.
Rate raise is simply dismissed as something that is expected. Something that is expected does not necessarily mean that it should be swept under the carpet and treat as biz as usual.
Higher fiscal debt and higher inflation led to drop in confidence in USD. The lost in confidence led to higher treasury rates required to attract supposedly safe treasury buyers. It's not normal and should not be treated as such.
In fact, it might just be a warning sign. Is this bull 🐂 about to end? Bull 🐂 market doesn't end just because market is at its peak. It ends when no one is left to buy! Euphoria reactions contrary to the norm is a good start. As Warren Buffett says, this is not investing or speculation. This is gambling.
Yes, silver price is raising as we stand now. Looking at the secondary charts, there is still a long runway to this rally. SVM, as leverage should be, is expected to catch up with the silver rally, and more!
Yes, it's not normal. Just ride the wave 🌊 and protect yourselves along the way.
@Daily_Discussion @Tiger_comments @TigerStars
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