Gold/Silver Ratio to the world: “anyone listening?”

Gold/Silver ratio indicates waning market liquidity

Since its fellow rider, the much reviled US dollar, is also still in rally mode the implication of the Gold/Silver ratio ticking a new high for its cycle is a negative thing. The negativity usually starts, handily enough, in the precious metals. Then if the 2 Horsemen keep riding their traditional route the liquidity drainage hits commodities and resources. Then come reflation-sensitive stock markets/sectors and finally, maybe even Tech and Growth if we do not have an extended Goldilocks situation like 2013-2016.

Here is the GSR ticking its new recovery high today.

gold/silver ratio

And what the heck, let’s toss in the other rider. USD (DXY) has broken back above the neckline of its bullish (but still only potential) inverted H&S. We’ve been tracking these two in NFTRH for many weeks now as thing 1 above put in a base and thing 2 below made a higher low.

Bob Hoye calls the Gold/Silver ratio a “metallic credit spread” for a reason. And that reason is to have signs in hand about liquidity/non-liquidity and inflation/disinflation/deflation. By this account the destruction in gold and silver that’s got the bugs’ panties in a bunch was in the cards. Now let’s see if the damage fans out elsewhere, assuming the 2 Horsemen are not repelled soon.

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