alice

NFTRH; Silver-Gold Ratio,’Inflation Trade’ Update and US Dollar

The thing that is not trustworthy if you are a deflationist or (anti-inflationist) is that the ‘inflation trade’ is getting kicked down by the ultimate jawbone, the FOMC minutes.  Often inflammatory events in markets have a short shelf life.  As such, the Silver-Gold ratio does not need to get hammered much lower, based on this event anyway.

The ratio has dropped to the convergence of the 50 and 200 day moving averages.  A real correction would drive it deeper, to the shaded zone at least.

slv.gld

The weekly view shows the implication for the DBC commodity fund.  SLV-GLD failed to make a breakout (a negative omen for the commodity bounce) but neither has it dropped to a level that would signal a breakdown.  In other words, who’s to say next week it will not put on another spike up in the series of up and down spikes?

slv.gld.dbc

US dollar fund UUP is breaking above the equivalent of the USD 94.50 level we noted as a modest bounce target.  This is in alignment with gold’s rise vs. silver.

uup

Inflationists and inflationist gold bugs fear the US dollar.  But pure gold bugs need not fear it.  This is in theory at least, and any given day or week has a life of its own.  So I am not talking one-for-one, real time here.

But lets not forget USD is bearish on its bigger picture.

usd.wk

As for the gold stock sector, a subscriber asked how long we should wait to confirm today’s bullish turnaround.  My answer is that a daily close would be a great start and a weekly close would be even better.

Again, the bottom line is that this wig out came in a space that was pregnant with over bullish aspirations and it came at the hands of a big jawbone.  Those can be fleeting in their effects.  I guess what I am saying is that considering all of the above, I feel much better about the sector on several levels.

The other bottom line is that as noted repeatedly, if HUI stays above 200-210 it still technically targets 251.

Please excuse any typos and scattered thoughts; got to run!  :-)