Silver-Gold & PALL-Gold Ratios

A quick add-on to yesterday morning’s update.

While the US dollar declined and the TIP-TLT ratio, long-term interest rates, commodities and nominal gold and silver all rose along with stocks yesterday, one holdout was the Silver-Gold ratio (SGR).

Until this ratio starts to rise it is considered a negative divergence to the asset market bounce we are calling the ‘anti-USD’ rally because in an environment where items that are positively correlated to the economy (and to varying degrees, negatively correlated to USD) are rallying, so too should silver vs. gold.  Silver has more industrial commodity utility than gold, which obviously has more monetary utility.

sgr

Taking it a step further, recall that in NFTRH 346 we reviewed the weekly Palladium-Gold ratio, which while still intact has been volatile and potentially in a topping process.  Yesterday, this ratio as well negatively diverged the asset market rallies.

pall.gold

The above ratios are bearish (ref. weekly chart of SGR in yesterday’s update) and potentially topping, respectively, by their longer-term charts.  The dailies above should bounce in order to eliminate the negative divergence to the asset market bounce going on.  If not, they should be respected as bearish indicators, potentially across many asset classes.