To further the case for inflationary 2013 (i2k13) and further asset price appreciation, let’s review one of those funny charts that tries to tell a whole story on its own.
Economically sensitive Palladium has just broken above an important resistance level in ratio to gold, the counter-cyclical precious metal. Palladium led gold down in the 2008 crash and led it right back up and into the last inflationary phase that we used to call Hope ’09.
Well Hope ’09 finally blew out in spring, 2011 as Bill Gross shorted the long bond thinking rates would continue rising and long term interest rates hit the upper boundary of the Continuum, which is where the final red arrow was inserted prior to what has been a long stretch of deflationary pressures being fought by inflationary policy makers.
Have we begun a new journey to the 100 month EMA (red line)? The PALL-Au ratio is one more indication that we have. We should watch to be sure the breakout holds and add this to the group of indicators stating that some inflation cost effects can get whipped up in 2013.