We have been tracking the correction in the US dollar (AKA the global anti-market) and its companion, the Gold/Silver ratio each trending down as broad market relief has finally taken hold. Well, if market relief came as USD and GSR were weak, market turbulence could ensue if they rally together
The Gold/Silver ratio implies ample market liquidity when declining and the opposite when rising (gold is more monetary, silver has more cyclical/industrial/inflation sensitive character).
The daily chart should be watched closely to see if this sneaky little move to the hard downsloping SMA 50 creeps any higher. It has already taken out a trend line and is consolidating at the SMA 50.
The weekly chart of USD (DXY) is best for observing the support level it has dropped to. Uncle Buck has taken a full 50% Fib retrace of the rally from the 2021 low to a support level going back to 2020. Risk, by these two indicators, has risen to the broad market relief trades. That would likely include the precious metals as well (for a healthy pullback) if USD and GSR rally together.
Question for Gary and fellow subscribers: It has been noted that Gold/Oil ratio is trending up, which is obviously a good thing for gold bugs. However I have a difficulty understanding wage situation in mining industry – what’s the labor share of miners’ input costs, and how quickly it is rising now. Unlike energy costs wage increase is sticky (or is it?), so I think it is important to consider. If anyone can point to some info/anecdote/research in this field that would be greatly appreciated.
There is a geologist or two in the subscriber base. Maybe one will chime in. If not, I’ll pass your question along.