In the previous post we see inflation expectations so well tamped down. In this post we look at silver’s break out of a consolidation channel vs. gold. If TIP-TLT is our way of sensing inflation indications by the bond market, Silver-Gold ratio (SGR) is a sensor within the metals market.
Caveats for inflationists… SGR remains well shackled (though potentially bull flagging at the key moving average) by weekly charts we routinely follow in NFTRH…
…and on the 1st chart above we have another one of those symmetry situations. SGR head faked down from the channel so could this be a head fake up from the channel? The chart and the little flag forming over the last few days look bullish, meaning the implication would be for a resumption of inflation based trades. That puts a spotlight on Uncle Buck in the lower panel and oh yeah, the Fed.
With inflation expectations currently hammered, it could be a grind for a while yet before this resolves, especially considering Brexit and FOMC noise. My preference would be for silver to drop vs. gold again, USD to firm up and asset markets to continue correcting because at the end of something like that the path could be quite clear. But either way, I’ll be ready and you should be too.
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