Silver-Gold Ratio & TLT, Strange Bedfellows

Well, it is a fine pre-holiday Friday and I am hoping that what is going on now marks the start of a phase where I can stop trading so much and do my favorite thing, which is to make like Old Turkey, be right and sit tight.

The Silver-Gold ratio and its implication, inflation, barring an epic reversal of recent events, seem to indicate that will be the case.

SGR daily…

slv.gld1

SGR weekly…

slv.gld2

Strangely though, while the US dollar may be playing ball (by weakening), long-term Treasury bonds are not (by rising).  Our target is getting blown away.

tlt

And Inflation Expectations are still burrowing southward…

tip.tlt

So who is right, Silver vs. Gold or Treasury bonds?

The picture looks like one where investors, speculators, casino patrons, black boxes, quant machines and substance abusers* are still fleeing deflation and rampaging into the safety of T bonds in order to form a massive counter-party to those positioning for the opposite, an inflation problem.

Bonds say I am wrong and yet asset prices say I am right.  It should be interesting as things play out.  I vow to watch my own preconceptions at all times and check everything against my tools and readily available facts.

* Actually, I think it is just investors as guided by their buttoned down, conventional advisors and pension managers who are pumping T bonds.  I just like listing that whole string of participants because it makes (public) writing about the markets more fun to be colorful about it.  Black Boxes, Quants and Speculators are probably on the inflation/bull side right now.

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