Daily Silver/Gold ratio (SGR) is now losing the baby bear flag. Cue the Seinfeld ‘bad chicken’ episode… “that’s not gonna be good for anyone”. Okay, well it’s a shtick I like to use. It could be revised to ‘that’s not gonna be good for many if the inflationary paradigm of the last 20 years is still in force’.
Although we are now in the 3rd month of a whole new paradigm. An undeniably deflationary one. So I question whether this important signaler is going to act as we have been conditioned for it to act over the last 20 years.
For example, the 2003-2008 period was inflationary. The 2010-2011 period saw the blow off and blow out of inflation (yes, I know many prices have kept rising; work with me here as we try to make sense of the financialized economy and its selective asset price increases and uneven inflationary/deflationary effects). Also, let’s not forget that since 2012 the US markets and economy bulled as a beneficial Goldilocks phase ensued while the rest of the world got hit with deflationary pressure.
The signal in monthly SGR is not unlike the signal made by the Continuum (monthly chart of the 30yr yield) as long-term Treasury yields tank with the herds flying into bonds.
But I happen to believe a flight into the bonds (the debt) of a hopeless and chronic inflator and money printer is not going to work out well for the herds. So what about the Silver/Gold ratio? What about when said herds find out they’ve been duped yet again and yields start to rise under pressure of inflation fears?
Okay, maybe I am just an old fashioned Crack-up-Boomer, but it will help to keep open minds all around. Nobody’s got the answers people. Not me, not you and certainly not the gurus and media “experts” served up 24/7. Open minds, we are in Wonderland.
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