Skip to main content

Silver/Gold Ratio Is a Guide As Inflation Signals Fade Again

The Continuum is Still in the Deflation Camp (9.24.19)

Pictures of a Reflationary Bounce-a-Thon (9.11.19)

10 year treasury yields

crb

copper

copper

The Metals & Mining ETF was one of only two vehicles I used to trade the bounce, somehow managing to fortuitously sell right at the SMA 200. But was it actually fortuitous or was it just a market participant thinking “profit in hand but an existing downtrend… take the damn profit!”? Oh yes, it was that second thing.

xme

And so here we are, in the midst of a precious metals correction updating not only the key downside supports/targets (each week in NFTRH), but also gauging the interplay of the two precious metals because while this (daily) chart is technically trying to establish a new uptrend in Silver (more relative cyclical commodity characteristics) vs. Gold (more relative counter-cyclical, non-commodity characteristics)…

silver gold ratio

silver gold ratio

There are many other signals to watch for aside from silver’s interplay to gold. These include the above-noted long-term Treasury yields, inflation expectations gauges like the 10 and 5yr Inflation Breakevens, Yield Curves, etc. But among the simplest are the charts above. Commodities are generally locked in daily chart downtrends and Silver/Gold is trying to break a still intact long-term downtrend.

Gold could merely out-perform cyclical assets in a deflationary macro, while the miners would leverage that out-performance. It’s the same drum we’ve been beating against the constant inflationary gold bug “death of the dollar” type promotions for the last 15 years. The miners rose into 2008 despite rapidly degrading fundamentals and over valuation (as gold under performed cyclical commodities).

Here is a final chart we’ve been using in NFTRH to gauge how HUI got ahead of itself in relation to another macro indicator, Gold/SPX. The black dot represents a similar condition to the 2016 top. The macro caught a second wind and that was all for the gold miner rally. See again…

AMAT Chirps, b2b Ramps, Yellen Hawks and Gold’s Fundamentals Erode (5.30.16)

hui

Subscribe to NFTRH Premium (monthly at USD $35.00 or a discounted yearly at USD $365.00) for an in-depth weekly market report, interim market updates and NFTRH+ chart and trade setup ideas.

Average: 4 (1 vote)

SilverSeek e-Weekly

Join the Free Weekly Silver Review!
SilverSeek.com week in review delivered direct to your inbox!