The cheering has been loud on X and elsewhere, and may precede a correction in Silver’s ratio to gold, and other markets (the “SGR trades”)
Go TEAM! Yaaay TEAM!!
Back on April 13th, to the sound of cricket bugs, NFTRH gauged the likelihood of a hard bottom in the Silver/Gold ratio (SGR). A reversal and charge upward that would lead a raft of other items, including the “SGR trades” in strategic and critical commodities, emerging commodity/resource based markets, certain stock market sectors and insofar as the silver bugs often lead the gold bugs, precious metals.
On gold and gold stocks, it should be noted that they would of course underperform some other items on the big relief rally (of which the SGR is a part) because they had trended up, even during the February-April “tariff hysteria” broad market tank job.
You see, in NFTRH we look forward. We do not make a lot of noise of the moment, and never cheer. Forward, baby. Here is a snip from the now public NFTRH 858, when our theory that would go on to become reality was first put forward:
I have a sneaking feeling that silver could make a catch-up move to its big bro. Just a hunch, as this weekly chart of the Silver/Gold ratio (SGR) proves there is little technical basis for it other than sometimes violent moves in one direction (in this case, down) are followed by violent moves in the other direction.
The SGR is thus far getting drubbed in its ongoing weekly chart downtrend. For an example refer to 2020. That tank job was an event driven situation, much like today’s is an event driven situation of a different stripe. If silver were to take leadership in the near-term, I would see it as a relatively short “trade”, not a long phase if the liquidity constrained, deflationary macro view is to play out. If silver were to wait an extended period, such a phase could follow a deflation scare and central bank policy flip to dovish.
It’s worth considering at least, and as you know, I am no raving silver bug. I did initiate PSLV per the update linked above and added a bit more as I contemplated the potential noted just above. If silver were to outperform soon, I’d see it as a trade. If it were to do so after a deflation scare, it could be more structural in line with an inflating macro as central banks and governments do all they can to bring on Inflation/Stagflation.
SGR today? Well, it spiked as planned, but it doesn’t look like much, does it? That could work two ways. Near-term with so much silver cheering and price predictions starting at $100/oz. there is risk. While the ratio remains in a daily chart downtrend and the nominal has come within fiddy cent of our initial target of 40, the indication is that the emotional bullish cheering (promoting, chest thumping, greed-instigating) does not fit the still-downtrending chart.
Remember here, the person writing now is the person who speculated on the rally to begin with to the sound of cricket bugs (as opposed to today’s loud, heroic chest-thumping bugs).
That’s all I’ve got to say right now. The cheerleaders are pumping the MOMOs and FOMOs. “Silver to da moon!”, “keep on stackin’!”, “$200/oz. easy!”…
And it just might happen in the inflationary macro out ahead. But a collection of evidence beyond the SGR indicates there will be market turbulence first, especially in the items that benefited on the the SGR’s way up.
“Ah, he’s always slamming silver!!”
Err, no. He was preparing bullish while cricket bugs softly chirped. Of course, I could be wrong this time. But I was right last time using many of the same market indications I am using now, only in reverse.
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