Silver Surge and the Money Map

Silver Surge and the Money Map

I joined the city in 1998 when the FTSE 100 was hovering around 6,000. In 2003 and 2008, it dropped below 4,000. Then, during the pandemic, it touched 5,000. After 25 years of heartbreak, the FTSE is getting going again.

The Footsie Breaking New Highs

Source: Bloomberg

High time you might say but it is well known that the FTSE 100 has little to do with the UK economy as it is dominated by multi-nationals. When you look under the hood, you soon see that 30% of the recent FTSE strength is down to natural resources (oil and metals), 25% banks, and 18% pharmaceuticals. Furthermore, half of the index comprises just 12 stocks, leaving 88 for the other half. Index funds aren’t quite what they seem.

The FTSE 250 is more reflective of the economy, and the good news, perhaps, is that while it is not at an all-time high, it is rising and keeping up with the FTSE 100. Over the past two decades, the FTSE 250 has led the FTSE 100 by 2.2% p.a., including dividends. The recent strength in the FTSE 250 was also driven by natural resources, especially gold miners.

FTSE 100 and FTSE 250

Source: Bloomberg

Looking at UK gilt yields (black) and inflation expectations (red), they both appear to be rising, although it is not entirely clear. But they certainly don’t seem to be falling, as is the popular narrative. If they were, you might expect property and REITS to be leading the way, but they have not. It has very clearly been commodities and banks, which prefer rising rates and inflation.

Gilts and Inflation

Source: Bloomberg

That means the financial markets are sitting in the top right quadrant of our Money Map, the friend of banks and commodities.

Money Map

Webinar: Positioning in an Uncertain World

We are hosting an Ask Me Anything webinar on Thursday, 23 May, at 4 PM BST. I will present a few slides sharing my thoughts on financial markets and then open up the floor for questions. I will be joined by my old friend Zak Mir, who is a keen ByteTree fan, and he will keep the house in order.

Please register to attend the live event.

If you can’t make it, there will be a recording. Just remember, if you have a question or comment, then please send it in.


This leads me to the silver breakout on Friday, which cut through $30 like a hot knife through butter. We have held silver since 2019, and I topped up in early 2020. It has been easy not to notice, but the position is now up by 89%, which is great.

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