By the way, you might want to check out this NFTRH 363 excerpt in which we go through some of Martin Armstrong’s views on gold and talk probably a little too much about my own. Macrocosm Revisited
I have had a target on the gold-silver ratio of low 80’s to 90. Then on Friday the GSR did this, putting that target in question (it hit 81, but I was thinking higher).
Here it is today, converted to GLD-SLV…
Continue reading Key Moment for Gold-Silver Ratio
Now that the US stock market has gotten in sync with the rest of the world in its ups and downs, it also joins the rest of the world in generally (and loosely; it’s not a minute-by-minute relationship) being inverse to the Gold-Silver ratio (GSR, AKA the “metallic credit spread” –Hoye).
Here is the daily view of the GSR, showing a gap up and spike that came with the stock market’s big disturbance and a consolidation down that has come with its relief bounce. This is a bullish chart and so, it is a short-term bearish chart for US and global stocks. GSR broke out and is bullish while above the MA 50’s, MACD and RSI are positive and AROON is trend up.
GSR weekly is fully bullish as well. It adds a long-term up trend to the daily chart’s bull features. You can see the long and grinding journey upward GSR has taken since it was drubbed in 2010 (into 2011) by full frontal QE, as silver exploded vs. gold and the ‘inflation trade’ took off in 2010 and eventually blew out (in spring of 2011).
GSR monthly offers a different view however, as it is nearing historical resistance. Maybe when this resistance is hit it will hold and those who have, shall we say cheered so long and hard for silver can finally deliver the ultimate “I told you so!” after 4+ years of futility.
The bottom line is that the Gold-Silver ratio indicates more short-term problems in US and global stock markets, commodities and even potentially the precious metals themselves. But the bigger picture view at least offers a line in the sand (long-term resistance) where an ‘inflation trade’ may finally get going again.
That scenario could be the product of a saturation of the non-stop inflation that has been promoted in the US and globally by policy makers, with a global deflationary backdrop hiding its effects. Alternatively, it could be the product of panic by the US Central Bank, should the stock correction get serious enough. The entire recovery out of 2009 has been, after all, about risk ‘on’ asset market speculation and wealth effects.
Whatever it is, you can bet that political animals and powerful policy makers alike do not want to see the Gold-Silver ratio break out of its big picture limits.
Well, of course change is coming to the macro markets. It has come every day since the beginning of time and today is different than yesterday. But I mean a change in the market’s character is likely coming in 2015.
NFTRH notes the divergent Horsemen, Gold-Silver Ratio and USD, and also cryptically notes that people need to have the proper market interpretations at the ready in 2015. It was just 6 months ago that we started managing a bounce in the roundly reviled USD in NFTRH. Now look at it, everybody’s bullish the buck.
The stock market is down big today. Oooh, that’s scary, eh? Well no, not until it breaks some parameters. Interestingly, some of my non-gold stocks are very green today. I think (think, mind you) that the market is just cleaning out the pipes as sentiment got over bullish again over the holidays. Those gaps need filling, after all.
But if and when it does go bearish for real I’ll plan to short this pig with conviction. Right now the only thing I am short is junk bonds and that is working well. I find it really interesting that everything is down in the face of the strong dollar but the precious metals. That is exactly according to NFTRH’s plan on the big picture. Exactly. In the near or intermediate-terms, other things can and will happen. But today is a microcosm of what I’d expect the big picture to look like under a strong dollar regime.
Meanwhile, the Gold-Silver ratio says Uncle Buck may be readying to take a break. It’s either that or the GSR will get back in gear and croak everything. I think the former may be in play.
Today the 2 Horsemen rode newly brave bulls back out of town.
The news driven short covering rally yesterday was impressive and now momo’s are being punished. Makes sense.
Continue reading NFTRH; USD & Other Indicators
Today is the kind of day when you’d do well to tune out any cartoon characters ranting about any sort of manipulation. The simple fact is that the 2 Horsemen, the gold-silver ratio and the US dollar (GLD-SLV & UUP) are riding together today in opposition to most asset markets. Period.
Well, here came the short covering rally in the precious metals. By calling it that I don’t mean that it cannot turn into something more, but today was most assuredly driven by short covering as the US dollar unwound some of its speculative sponsorship. One can assume that large speculators took it on the chin on both ends, in the USD and in gold/silver as the Commercial traders had been aligned increasingly bearish and bullish, respectively.
Continue reading NFTRH; Multi-Market Update
So our thesis has been that a concurrent rise of USD and the Gold-Silver ratio (GSR) would not be a good thing for markets. Stick it in the blender and mix with several other indicators (we have not even mentioned weak junk bonds and junk to quality credit spreads, at least not publicly) and you have ‘so far, so good’ on a coming bear case.
To review, a rising GSR means that speculative liquidity is coming out of the markets, as in risk ‘OFF’. The rise in USD is a fundamental consideration that would hit manufacturing first. Here again, I tell you that the biiwii guy, a former manufacturing person, was the first to project coming US manufacturing strength for NFTRH subscribers. Just to counter a few wise guys who would finger point and yell ‘perma bear!’ Today’s firm bulls were all hiding under rocks as Congress did the Fiscal Cliff Kabuki Dance at the time.
To put things in non-technical terms, I think some shit’s happenin’ out there folks. We’ll see.