Gold Silver Ratio, SPX & HUI

So we have been making a fairly big deal about the over bought state of silver vs. gold or put another way, gold’s extreme under performance to silver.  Witness the Gold Silver Ratio (GSR)…

Normally when the GSR turns up it is not a good thing for anybody, least of all the stock market.  But the stock market has ignored such signals over the last year and just stayed on the robo rally while predictably, the gold stock sector has usually gotten clobbered when the GSR has turned up from over sold levels.

2013 was a year when a lot of indicators went on the fritz and GSR was right there among them.  That is the power of the Fed and its will toward certain market outcomes.

But if 2014 (2015?) is a year of a macro pivot, things will start working again and one wonders if other things might go on the fritz, like those pertaining to the gold sector, which could not catch a break over the last couple of years.  If the great macro manipulation starts to fade, maybe there will be benefit to that which has suffered and a comeuppance to that which has benefited.

So while issues in the precious metals can be expected, I keep open the idea that maybe the deplorable CoT and even the over sold GSR may not be as bad for gold stocks as they have tended to be over the 2+ years.