Gold/Silver ratio continues to diverge the inflation trades

Gold/Silver ratio (and USD) would attend global liquidity stress

I know. I know. It’s a mutant inflation and all, with global war and politics driving the bus now, and the Fed all but marginalized. But still, more monetary and counter-cyclical gold is rising in relation to silver (more cyclical, industrial and hence, commodity-like) and that is not cyclical inflationary signaling, especially with both metals struggling to do anything nominally.

What it is… is a warning. A long, grinding one that justifies the reserve currency’s strength over the last year. I see gold bugs on Twitter still making excuses and telling how the USD is the last currency standing much like the last man standing on the Titanic as one end of the soon to be sunken ship remained aloft.

But the excuse makers do not realize that the USD is a tool and that tool is still used by liquidity seekers. Valueless? Yes and no. It is valueless in that it is a played out currency marking trillions in debt. It is of value, however, as a way station to future investment (hello gold) until it isn’t. It is still the counter-party for global asset trades. For a year and counting now, it still has that value.

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This Post Has 2 Comments

  1. Barden

    Thank you for these insights.

    Does the use of the gold-silver ratio require the belief that there is no price manipulation in the precious metal futures markets (including the spot price)?

    There seem to be two camps here. The GATA camp who purport to have the manipulation evidence, and the opposite camp who ridicule GATA and its followers as hallucinating tinfoil-hat conspiracy theorists.
    Best regards.

  2. Gary

    There is price manip in most markets to one degree or another. But I do not listen the GATA ghost stories because manip does not control the trends of the metals. So I am in the GATA is hallucinating (and making a cottage industry out of a conspiracy) camp.

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