Looking Closer at the Silver/Gold Ratio

The noise about silver continues. But I’ve been talking about silver since before everybody was talking about silver, so let’s not stop now.

In this case the all-important Silver/Gold ratio is the subject because I see it as the first spark, the ignition to any coming cyclical inflationary or stagflationary phase that may brewing out there. It’s simple, silver is a precious (sort of) metal that has a wider range of industrial (commodity-like) uses than gold. This makes SGR an early indicator within the PMs and that indicator would signal or deny a coming inflation trade.

Daily Silver/Gold has done nothing it has not done previously over the last couple of years of bear activity (and macro Goldilocks/deflationary). This week it’s made a hard and impulsive spike to the 50 day moving average, which is trending hard down.

silver/gold ratio

Silver/Gold weekly uses the EMA 60 to advise just how far the ratio has to go to even think about changing the major trend. The inflation trade of 2016 busted the trend for a few glorious moments only to be put back in its place by US Goldilocks and global deflationary pressures. The lone hint that I like here is the weekly STO (wondering why I had shelved this indicator for so long) above 20, which is what you want STO to do to make a positive signal.

silver/gold ratio

So with the appearance of a global currency war (disguised as a trade war), US and global Central Banks rolling over in unison and economies still functioning relatively well it continues to be possible that an inflationary cycle is in the offing. This would be indicated by the Silver/Gold ratio getting out of hand to the upside.

As you can see, there would be a long long way to go for that indication. So why don’t we just calm down a little bit, shall we? Let it play out and just maybe we’ll look back and think thoughts like ‘wow, I remember when I bought silver at 14.5 bucks and some of those miners way down there in the bargain bin’.

Subscribe to NFTRH Premium (monthly at USD $33.50 or a 14% discounted yearly at USD $345.00) for an in-depth weekly market report, interim market updates and NFTRH+ chart and trade setup ideas. [Note: the subscription rate to the value-priced NFTRH service will increase near summer’s end, so if you are considering a subscription don’t wait to lock in the current rate]

You can also keep up to date with actionable public content at NFTRH.com by using the email form on the right sidebar and get even more by joining our free eLetter. Follow via Twitter @NFTRHgt or StockTwits.