Silver-Gold Ratio and the ‘Inflation Trade’

The Silver-Gold ratio (SGR) has been a primary indicator we have awaited for a confirmation that a phase of overt inflationary effects may get under way.  This would have implications for everything from commodities to resource based economies (like many emerging markets).  It is one of the ‘market-based’ inflation indicators we have discussed; a metallic “credit spread” as Bob Hoye calls it. When silver leads, price increases across many other asset classes are more likely.

Here is the status using SLV and GLD.  The SGR is rising just above the March high and is not over bought.  The pattern looks constructive.  When such time comes that SGR takes out the SMA 200 (red) and holds it (note recent failures in August and November), we would have a confirmation that an ‘inflation trade’ is in progress.


As it stands now, we have had NFTRH+ updates on Energy and yesterday, Uranium.  As you know, I added Agriculture per recent charting of GKX in NFTRH.  And yesterday a public post at the site showed the still-intact DISCOUNT that gold and silver fund CEF is selling for.  So you know I have been inching toward said ‘inflation trade’, with growing interest in silver.

A move by the daily SGR above the SMA 200 would signal a new trend.  So we remain grounded, here is the weekly view of SLV-GLD still having gone nowhere.  But a daily chart’s signals would have to come into play first in order to move a weekly chart’s needle.  The best signal continues to be a rise above the weekly EMA 80, which now happens to be the same as the daily SMA 200.  It would be a high probability signal.


The daily chart above is constructive.  Other potential investment areas are making technical signals, like the XLE Energy ETF for example.  But also crude oil is climbing above its SMA 200 today.

With the way US and global Central Banks have seemed to be summoning inflation, it looks like we are getting close to the time that they get their wish.