The first is the prevailing sentiment. Before the CPI was released, commentary on the precious metals took two different roads.
If the CPI was worse than expected, the Fed would raise interest rates which would be bad news for gold and silver. If however, the government’s inflation report came in less than expected, it would be bad news for gold and silver because no one would need to buy the metal to protect one’s purchasing power from inflation.
So there you have it. Conventional wisdom had it that gold could not win. No matter what CPI was reported, gold and silver would get hit, and they did. But here’s the important message from this conventional wisdom.
When sentiment gets so bad that there is no reason to buy an asset with a 5000-year proven track record of protecting one’s wealth, you know the price of that asset is extremely undervalued and ready to move higher. When it comes to markets, conventional wisdom is usually wrong, and today was not an exception.