The US dollar and the Gold/Silver ratio are bulling together…
And per the Seinfeld bad chicken episode, “that’s not gonna be good for anybody.”
Here we see Uncle Buck (DXY) doing what he has been doing since he began diverging the inflation hysteria well over a year ago.
And his fellow rider doing similar. For anyone new to this, the ratio of gold to silver matters because it is a look inside the relationship between two precious metals, one very monetary and less inflation sensitive and the other not so monetary with more cyclical industrial utility and more inflation sensitivity.
Sort of a hidden early warning indicator, eh? The warning being that market liquidity is in trouble when the GSR and the reserve currency are bulling together with USD receiving all those bids from casino patrons seeking liquidity.
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Regarding liquidity, the fed also increases the Bal sheet reduction 9/1. I saw a commodity chartist on Bloomberg leaning that the dollar would soon turn into a double top and would retrace back to perhaps 100 or below. Is the correlation as simple as rising dollar negative for stocks and commodities? Falling dollar positive? Thanks.
Too many variables in the mix at any given time to call it black and white. For example, if it were a Goldilocks situation (e.g. 2013-2019) non-inflation/reflation/export stuff in the US would be perfectly capable of rising with the strong dollar.
But at the end of an inflationary phase if both USD and GSR go up it’s not a good sign at all.