IKN

full of sound and fury, Signifying nothing

Chart of the day is…………

….the Gold:Silver ratio.

No squiggly lines or stupid drawings added by yours truly this time, just the 50 and 200dmas to add some colour.

This ratio has now been over 70:1 for six weeks, a very high multiple and defying the silverbugs bigtime (a group that makes the goldbugs seem well-adjusted). Of course historically silver is extremely oversold compared to gold but we are also living in historic times (financially speaking, at least), so I’d venture to say the two are related. Wouldn’t you? (Check that chart again and note the dates). And then by looking around and noting the state of play in things like copper, tin, zinc etc it seems pretty clear that despite its $730/oz price tag that is 30% off the highs of early this year gold has benefitted from a lot of safe haven buying to keep it from dropping below $600/oz or so (and a GSR that fluctuates between 60 and 64).

I’ve stayed away from buying SLV for a while. Personally speaking I do get bored sitting on the sidelines and watching the wild swings and so I’ve tried a couple of small-sized quick-trade stocks recently (well…JAG was small, but then yesterday it turned into medium) but this isn’t the time to trade with much confidence even when silver offers an 80:1 screaming ratio.

Final thought: the next time a goldbug tells you (or points to an article that says) the gold bull is still intact, just reply that gold is 30%+ down from its highs. What do they want, that it hits 50% down before calling a gold bear market? 60%? End of story. If they insist, you have full permission from the sensible people to laugh in their faces.

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