The USD and Gold/Silver Ratio will advise bullish or bearish, liquidity or lack of liquidity for many market areas
When USD rises hard while the Gold/Silver ratio is also doing that it is a signal of market liquidity stress, as USD is the reserve currency in which most accounts are settled and gold is a much less cyclical and inflation-sensitive metal than silver. In other words, more of a liquidity haven.
It’s a patience thing, waiting for USD and the Gold/Silver ratio to give a unified signal:
Market liquidity crisis…
…or market liquidity joy fest…
As DXY continues to hold its breakout support area all we can say is that Uncle Buck took a solid pullback for a test. Nothing worse as yet.
Here is a longer view, giving perspective to the base breakout.
Meanwhile, fellow horseman the Gold/Silver ratio doggedly holds to its bullish pattern. Now, will this bullish looking pattern turn to a bull run for Gold vs. Silver? If so, and if USD also rises hard or impulsively, get your flak jackets ready. It would get interesting (finally), and it would get dangerous for MOMOs, FOMOs and robotic “stocks for the long-term” thinkers, millions of whom are embedded in the markets by their robotic financial advisers.
As yet, we have no signal. So I will keep patience (and perspective) for another week, month or year if I have to. I’ll manage the market we have (high risk, still bullish) but always be aware of what’s going on beneath the surface (and the USD and Gold/Silver ratio tag team are only one aspect of several to be kept tabs upon).
The 2 Hurlsmen partied on all through 2024 and into 2025. But there is a small turd in the punch bowl that nobody has noticed yet.
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