Silver & Gold To Inform Dr. Copper And So, The Macro

They call copper the metal with a Ph.D. in Economics. But these days Doctor Copper is little more than a quack in that regard, taking a cue from the metals whose interplay will be critical to deciding the coming macro for 2020 and the run-up to the next US election. Thus, they are the 3 Metallic Amigos, riding together but providing different signals at different times (this being nftrh.com, you will have to put up with the odd shtick from time to time).

 

As we have noted repeatedly, the Silver/Gold ratio takes it place alongside other indicators (like long-term Treasury yields, yield curve, TIPs ratios, inflation breakevens, etc.) of a would-be inflationary environment. When silver (more cyclical, commodity-like characteristics) rises vs. gold (more counter-cyclical, liquidity haven characteristics) it is a hint toward an inflationary macro.

A daily chart of silver/gold shows a constructive ratio at yesterday’s close and this morning in pre-market silver is +2.77% while gold is +.77%. The implication could well be an end to the current bull flag consolidation at the moving averages and the next upturn in silver/gold, the miners and possibly the inflation/reflation trades that tend to follow.

silver gold ratio

 

But with FOMC week dead ahead and the Algos tendency to create all sorts of havoc in its wake, let’s stay grounded for the time being, shall we? Silver/Gold above is quite constructive, but its monthly chart is still trending down.

silver gold ratio

 

On a related matter, we had an NFTRH update on Wednesday noting among other things about the HUI Gold Bugs index…

“The longer the correction has gone on the more it has moved from the look of a minor topping pattern to a potential consolidation pattern, with the overbought readings addressed through both price and time. Personally, I feel well corrected even though I have retained the majority of profits. That is because of the time element and the mental grind of hedging, balancing and analyzing this thing since August.

It’s a volatile but orderly correction that has retraced 38% of the previous rally and not even touched the first short-term support area yet. The problem for a bear or for those of us who’d like a buying opportunity at HUI 180 is that for a long while now, every gold bug and his brother has known about the correction. Back in August they were greedy. In September they were still spirited. Here in late October, they’ve been dulled and muted at best. That’s not bearish.”

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