Did Someone Say ‘Inflation Trade’?

Well yes, NFTRH 495 was that someone. A screenshot from the Wrap Up segment…

With 2-10yr Treasury yields rising anew this week (as 30yr yields lag in similar fashion to the cycle out of mid-December 2017) it’s all in line. The play has been that yields rise with stocks and commodities but maybe when the long bond’s yield starts to play catch up trouble is indicated for the macro, as with the January run up to February’s stress. Anyway, here’s the look in pre-market (from Investing.com).

There is gold and there is silver, playing along. As noted in the screenshot above the Greenspan inflation period is on my mind as it is a very valid template to to the current day, complete with a fiscally reflating Republican following a 2-term Democrat in the White House. But gold needs to maintain this stair-step rise vs. SPX on the daily chart.

Meanwhile, the Industrial Metals and miners have maintained their uptrends from early 2016 when the whole raft of ‘inflation trade’ (incl. gold & stocks) items started higher. Here’s the monthly GYX chart we’ve used in NFTRH to maintain this view. We are using daily, weekly and monthly charts of the IM miners to refine the investment/trading view.

For our final chart of the post let’s look at the Silver/Gold ratio. First let’s look above and note silver +1.8% this morning and gold +.44%. Now let’s consider what the implications could be if silver were to break this downtrend vs. gold. Not a prediction folks, but it is our job to always be looking ahead and considering rational outcomes.

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