This page has been archived and commenting is disabled.
The Gold/Silver Canary In The Coalmine
In general when equity prices are rising and credit spreads are tightening, the ratio of gold-to-silver prices falls as 'fear' ebbs away and confidence in a real economy returns as exemplified by the rise of risk assets. Twice before we have seen the anti-correlation of stocks and gold/silver flip to a highly correlated regime, and as Bloomberg's Chart of the Day notes, each time it suggested "stocks were due to snap". It seems a concerted push above and a 50x ratio (for gold-to-silver) tends to exhibit notably risk-off behavior. Currently, the S&P 500 and Gold-to-Silver ratio have been highly correlated since this last rally began in stocks and as HSBC's Charles Morris notes, this suggests a 'snap' in risk assets within six months.
Charts: Bloomberg
»
- 27502 reads
- Printer-friendly version
- Send to friend
- advertisements -
Snap? I want "Snap! Crackle! and POP!"
silver always underpeforms gold in a downtrend. This downtrend started in Nov 2012 when the BIG DISCONNECT took place as the FED & Central Banks pushed up stock prices and manipulated gold and silver lower. I explain this in my post:
Controlling the Beginning Stages of Hyperinflation by Manipulating the Precious MetalsGood review about FED, US$, and gold
http://www.thedailybell.com/29124/Paul-Craig-Roberts-Washington-Signals-Dollar-Deep-Concerns
Gee, precious metals are hitting multi-year lows, and the indices are at record peaks, does it take a genius to figure where to put your money? But then again, MSM propaganda has done a good mind f**k on joe six-pack.
Policy makers almost always choose inflation over deflation, and the longer it plays out and the greater the underlying asset base, the more likely inflation will lead to hyperinflation.
There are no drivers of global growth when 3 out the 4 top economies have demographics working against them, ZIRP is no longer working as it did with every other recession, and printing money has decreasing marginal utility.
Precious metals have never gone to zero, whereas most forms of paper assets have and will again.
good article, thanks
That chart is excellent. Tells the whole story. Super Post for Zero Hedge Readers.
I"ll give you conspiracy buffs a simple trick and bet you don't use it. The gold weakness is directly related to the JGB selloff which has occurred twice within the last two months. Gold goes back up when JBG yields come down again which will be anytime now. All the other metals and mining shares have nothing to do with this..
Silver was hit harder than gold this last time, so that's another metal. This just goes to show that metals are in fact money, since it is money that they are correlating with. You're right that I won't use this trick. The real trick was convincing people that paper has value. I'll keep accumulating metal for now.
WHEN?
I have been in metals since 2003. It has been great insurance, BUT.......the ability of the Central Banks to use unlimited fiat to control the implosion or delay it indefinitely seems without end.
Remember - in the long run we are all dead.
George Soros seems to think metals are going higher pretty soon based on the amount of calls he bought on GDXJ.
that SEC from is old, watch for updated one, he could have bought calls to cover his short. or he could have sold them all.
Yes, I once held Silver Standard Resources at a time when Soros supposedly own it and found out later he had sold. (My decision had nothing to do with whether Soros owned or not.) I once owned Pan American Silver when Buffett supposedly owned it, but found he had sold also. I have not been in paper silver or gold, including the miners for a very long time (exited with 4x return). Holding physical takes endurance. Alas, the performance of the markets under the Fed's Ponzi is leaving folks who listened to me holding large losses. In this way the Manipulators are taking their toll on us all. The Math says they lose and that we win, but when that happens looks to be even a decade off. By that time the frugal will be quite literally buried.
Math? How quaint!
Arrow, your advice will be vindicated, (I know how you feel) dont't forget the dynamics that led you to your veiw are still there. They have been temporarlly blurred by brute force. You planned for the long run.
Keep the faith.
Oh, I have many arrows left and many of them absolutely THRIVE on the world as now exists.
"Roast me! Hang me! Do whatever you please," said Brer Rabbit. "Only please, Brer Fox, please don't throw me into the briar patch."
I have a briar-worn coat. The initial forays into the thorn beds of the financial terrorists have been satisfying indeed. It was like a bolt out of the blue, leaving not one, but two, oligarchs sort of, well.....exposed.
When the world changes as in these days, the observant, the studious, the risk takers, and those who advance, instead of retreat, will carry the dead out on their own shields. Steal my money, eh? There is a PRICE for that you poor bastards!
In a Dog eat Dog world, it doesn't pay be wear milk bone underwear. Most here don't.
They will never know what hit them when the tide turns. Here's to catching the wave that they drown in.
Arrow, I own a few silver miners...it keeps me humble. Very humble.
If you own CDE, you have my sympathies.
"George Soros seems to think"
Sioros does not think. He is an agent of the Banking Mafia Oligarchy, consequently, he knows what is going on.
If someone bought gold in 2008, they would have outperformed the DOW by 50%. If you bought Silver you are EVEN compared to the DOW. Even though silver has not performed as well as gold, its current value has been pushed into the toilet, while the DOW JONES is sitting at the edge of a CLIFF.
Dow Jones is hardly at the edge of a cliff when you have Kooksian economics in play.
Don't get me wrong. I bought a lot of silver at $5.25 an ounce, but listening to KWN since its inception frankly has me burned out on breathless anticipation.
A fellow would croak being breathless this long.
I have been frugal beyond everyone I know.
I am getting murdered by the Kooksians and they have infinite electrons in their computers.
Have you noticed... since NOV 2012, Gold & Silver have been clobbered by the Monetarists... but the price of OIL is almost at the same LEVEL:
NOV 2012, DOW/WTIC OIL ratio = 157/1
TODAY, DOW/WTIC OIL ratio = 158/1
NOV 2012, DOW/GOLD ratio = 7.5/1
TODAY, DOW/GOLD ratio = 11/1
NOV 2012. DOW/SILVER ratio = 375/1
TODAY, DOW/SILVER ratio = 671/1
Looks like the FED & CENTRAL BANKS have targeting more the metals than the energy that makes the world's economies move.
Look at the world today.
If your eyes have been opened you can see this whole "world" is today held together with fear and denial.
Does anyone think this rolling shitstorm is getting or will get better?
Enbrace the uncertainty of today, Its what we have been given.
Our future is certain chaos.
Even the London Gold pool ended....
Is it 'SNAP' or 'EBT'?
How about SNAP, WIC, and EBT? They're free you know.
"this suggests a 'snap' in risk assets within six months."
says the "old normal" thinker
let it happen. please.
Gold/Silver ratio will be 1:1 one glorious day...
Haha yeah because that's ever happened. I could see 1:8 but 1:1 you're high!
That has happened. Silver was 2-4 times the price of gold for thousands of years in Egypt.
Now, as then, above ground silver is rarer than gold, a condition that has not existed even once since that time. The only way to stop it is to raise the dollar price to the point that industrial use slouches or stops completely. Even if it disappeared, it would take 5-10 years for the silver stockpile to build high enough for there to be a 1:1 ratio above ground, IIRC, assuming you could even mine the stuff anymore with a complete shutdown of all silver using industry.
Conversely, if the industrial use of silver slouches (or collapses dramatically) so will price. Gold is held, silver is spent. The velocity of silver will also keep a lid on price. There is a reason silver has always made better coinage and gold has always laid still absorbing monetary mayhem. I see 100:1 to 200:1 as a more likely scenario.
"if the industrial use of silver slouches (or collapses dramatically) so will price."
Not necessarily. 80% of the silver produced is a by-product of other mining, mostly copper. What happens to the SUPPLY of silver if industrial demand drops? The relative industrial demand for silver versus other metals seems to increase as more and more uses are found. Silver is also unique and there is no substitute in many applications. Also, it tends to be a minor (but essential) input in many products so that the industrial demand is not particularly sensitive to price.
'What happens to the SUPPLY of silver if industrial demand drops?'
SUPPLY increases. Know what happens to PRICE when SUPPLY increases? For fucks sake Bastiat, I thought you knew economics... I guess you're one of those who believes in 'the recovery'? Demand will evaporate when the global crash comes. Silver will be currency. Gold will be the store of value extraordinaire. Believe what you want, that's how it will go.
Sorry for not being clear. What I meant to say was: "What happens to the SUPPLY of silver in general industrial demand drops, ie. demand for other industrial inputs, especially copper? What happens, since most silver is produced as a bi-product of those other metals, especially copper, is that the supply of silver drops with the drop in copper (or other) demand (and production). As demand drops, prices drop and production drops.
In a nutshell the point was that silver has a built in supply limiter to offset downward pressure on price coming from reducted industrial demand for silver.
Take a few breaths.
You're a bagholder without a ball sack.
And you suffer from normalcy bias. Guess we'll have to wait and see who is kookier.
The disciples of John Menherd Kooks rule the earth.
All hail the dominance of Kooksian economists.
" Debt is Wealth .....Debt is Wealth"
Got it?
Oh, yer not Kooks, silver-bugs are more like the 2nd string, and we starters are rooting for you anyway. ;)
I pray you're right. I'll factually shit myself if it gets to 25:1!
I'll be selling when it hits 20:1. That's when the "We Buy Gold" stores will turn into "We Sell Gold".
I will as well, after voiding my bowels into my gonch.
Tell us, what is a "gonch", preciouses?
I believe it is that pocket of space underneath your balls extending to the rear of most elastic legged undergarments. Charlie Munger says, "When short on thread, place your gold in your gonch."
Thanks, checking now...
and that is why ben and the boys are working so hard now to contain the gold/silver implosion.
but........it ain't workin' no more....
nope.....they ain't got no metal left....and the damn peasants keep expectin' delivery.....
seems like no one trusts bennie, jamie or blythe...
wonder why?
TBTF can't lobby physics to change its laws.
Precisely why it isn't the "circuses" that matter, it's the SNAP payouts and the ability to deliver the fucking bread that count.
The American Catch-22 is defined by the fact that the dollar's reserve status precludes inflationary tactics to restart the industrial engine however people must be fed and currency not even backed by productive value-adding (as in an industrially-backed fiat) must be used to grease the food supply chain, as you say. Thus supplemental currencies are issued in the form of EBT, credit, vouchers, "benefits", etc. Society is two, maybe three hungry days from utter chaos.
It has and will always be about the bread.
Tipping point for any society is hunger.
So, you must have some distant relatives in France.
That's how french revolution started: the price of bread.
EVERYTHING is ready for a big S N A P!
oopsy daisy....look at that silver price go....
I don't get it.
Is Silver going to $20 or $50 near term?
lord god above, please let it go to 20......i have stocked my ammo selling out all my stocks and ready to plow it all into silver at that level.
so please god, let us see 20 before this is over.
If you've got the money honey
Buy silver dimes!
We'll go honky-tonkin'
We'll have a time!
you sing to hank jr or lefty? i hope it is lefty
Lefty, but Willie does a great version as well.
Uh huh........good luck being able to obtain any physical silver at that price. You will be waiting a looooooong time to take delivery.
Even if it goes to $20 still gunna cost us $30 so does it really matter? Paper price could be a dollar but phyz might still be $30.
Yea but good luck finding any phyz at that price, I'm getting 3 week delays as it is.
If it goes to $20 then it will carry a $45 premium to spot; if it goes to $50 it will have a $15 premium over spot. Capice?
You seem to think that Central Bank issued fiat will be an acceptable medium of exchange when this happens. This may not be a correct assumption.
Both, and maybe in the same day.
$50 near term...no wait I meant $20...
Probably both. $0 too.
Is that Zimbabwe dollars?
Hey I got zimbabwe 100 trillion dollar bills, how many you want, I'll trade them for silver
Lost your ass on $50 silver b/c you're an asshat with three new assholes
We count PMs in ounces, not dollars. That being said, I drank a lot of Utica Club in high school... :-)
looks like "containment" ain't a workin' this mornin'.....sorry jamie.
Looks like the FOMC email was again 'mistakenly' sent out 24 hours ahead of time again.
The "mistake" being that anyone noticed ...
Bill Gross will go "emo" again if he's not on the list.
Hmmm. "hacking into JP Morgan Chase's proprietary trading systems." Hmmm.
Yea things are changing, suddenly it's the 'Teflon Messiah' in trouble and all this, it's hardly 2009 anymore with 'an idea' of 1 man and a 'new reality we have to give a try'...I'm buckling up for impact myself.
SNAP! Food Stamps for all!
Within Six Months?
The Dow will be at 20,000+ by then!
The markets are highly manipulated now - the most in history. Why should past correlations matter?
Sarcasm or bullshit?
Risk assets are rising because some have access to free money and they gamble. The real economy is dying. Corporates are taking out loans and issuing bonds to keep paying dividends on a production that doesn't exist just to keep shareholders happy and have the illusion of a functioning economy.
Delusions can last up to several years in this culture where massive propaganda efforts have blinded the people from all sides. Cutting through the bullshit and seeing truth for what it is, becomes more and more difficult for most if not outright impossible for some. The paper money changers have mastered the game of perception over hundreds of years.
Meh....well I'm not blindly buyin it at all myself.
MOMO chasing HFT algo's were not programmed to include anything to do with the real world economy....their programs are very similar to that in my rat terriers: if it moves I chase and attack it...if it sits still I may wait for it to move....if it is a skunk or a rat, it makes no difference and the results do not enter the learning curve.
Interesting chart....now we can sit back and see if the past is repeated given our new economic forces.
I seem to see charts like this all the time supposedly predicting something. We are on uncharted waters to be making predictions. Little advice: If you're not a day trader but believe in ZH and their message make your investments for the long term and only invest what you're not going to need anytime soon. I still have friends sitting on $50 silver they bought. Few more years it will most likely be worth it but right now it's a rough road.
EU: Deposit Haircuts over 100.000 from 2016
"The case in Cyprus showed how important it is to have clear procedures for making shareholders, bondholders and ultimately depositors foot the bill," a press release from the committee said after the vote.Money in EU-Banks isn t save anymore:
http://homment.com/deposit-haircuts
earlier this morning bloomberg had 2 of their blonde hoes discussing the "crash" in Gold, why it was crashing, and why platinum and palladium were the new "precious metals" in high demand by investors..
this stupid bitch had the nerve to say its was due to "no inflation" worldwide, and becuase platinum and paalidum were "industrial metals" used to make catalytic converters!!!!!!
man, i called them bithces lying dumb ass cunts and turmed that shit with a fucking quickness...
fucking dumb ass propaganda pitching hoes.................
I'll watch SpongeBob before watching Bloomberger, CNBC, etc.
lias and whores of the oil-soaked, spy-riddled monoploy press
Why would you get so mad over something that you think is untrue? CNBC has their opinion. If you think your investment is sound, then why get mad because someone is bad mouthing your decision?
It looks to me like you are quite insecure in what you are holding and your emotions are based on what some strangers think about your invesment rather than your future outlook.
I think you should probably pick another hobby as this kitchen seems too hot for you to handle.
dude do you fucking know me???
and why the fuck you so concerned with whatever you believe my emotional state to be???
and whats with all that "insecure" conjecture and so on???
and what hobby r u refereing to...me stacking metal for the past 5 fucking years???
i aint worried about your mental state or what the fuck you got to say so why you worried bout me??? u like suggestions, well i got one for you...
sounds like you got a self worth issue to deal with or some other complex...maybe moms didnt give you the attention desired back whenever..
if u dont like what i post then pass me the fuck over...or better yet keep your bitch ass thoughts to yourself....bitch...
They say petting a puppy, or watching a fish calms the nerves, lowers the blood pressure, Kaiser. Silver coins in the fish tank's bottom help, too, I've learned.
"CNBC has their opinion. If you think your investment is sound, then why get mad because someone is bad mouthing your decision?"
Because whorehouses like CNBC deserve to be discredited every minute of every day, for eternity...
The bimbos don't know any different and they work there for a reason. Ann Barnhardt isn't attractive and doesn't have a TV show or channel where she could really educate the people.
Instead corporate media, whoring corporate CEOs/CFOs boot licking all the same shareholders are lying as much as they can get away with.
The true economy is elsewhere. Strip away the lies and the marketing and see what you've got left.
Ann B. gives real men boners
I see you've got that misogyny thing working there.
Back before the big crash of 2008, when only a handful of folks were thinking PMs, the gold/silver ratio was over 80... When monetary pressure entered the market that ratio dropped to near 30...
To try to make something out of this ratio in the current market... When prices are set artificially through market manipulation is, in my opinion, a fool's game.
If I were to attempt to assess a reason for the increase in the Au/Ag ratio I would suggest that silver is a smaller market and easier to drive down than gold... And most of the players stocking up on metals at the moment are large institutions which are buyers of gold.
Which is not to say that the equities market is not going to crash... It will someday... Maybe sooner, maybe later... It too is an artificial market pumped up on paper...
Should the Au/Ag ratio drop, and I am convinced that it will, it will be the drive to purchase physical silver for use as money that will be the primary cause...
What the Heck is this mainstream mumbo-jumbo ... we should just be calling you CNB-Tyler.
OK, so they might want to move the market down, but it is an F'n managed financial system, they can do whatever the heck they want including not do what they did twice before.
This site is getting totally worthless.
So.......stop annoying the rest of us with your incessant whining and go back to fox news.
One could equally note that sharp pops in the gold-silver ratio in late 2011 and mid-2012 preceded ... strong rallies in stocks.
As is obvious on the chart.
Selective chart labeling doesn't prove anything ... other than an overactive imagination.
I think that third arrow should start in late 2011. How long can the keep the equities inflated with QE?
I think the best way to monitor what going on in the Gold and Silver paper markets is the Gold and Silver Calendar Spreads. Get a good live idea of the Contango or Backwardation in the market. Seems to be alot of inventory shifting going on in the bullion markets and those calendar spreads may give insight into inventory oddities.
i'm cool with the price smash. just picked up 100 more oz/Ag.
oh, and the metal i ordered back on 4/17/2013 finally shipped today.
Yup. GSR is saying S&P 1200.
Hong Kong Mercantile Exchange to Close Monday, Gold and Silver Paper Contracts will have Cash Settlements
http://news.goldseek.com/GoldSeek/1369077753.php
Hong Kong Mercantile Exchange to Close Monday, Gold and Silver Paper Contracts will have Cash Settlements
http://news.goldseek.com/GoldSeek/1369077753.php
And thus sayeth the mainland.KEEP all phyzz,same game,different leaders.
I have been 2X short for almost a year now. In hindsight it looks stupid because there would be panic if the market did what it SHOULD do. Imagine all the people collecting from a pension fund. They HAVE to keep this ponzi going indefinitely. Ultimately when it crashes my 2X ETF will be worth nothing anyways.
Oh it is SO tempting to bail, and join the herd. ZH please keep me on track!!!
If you hold physical you don't lose unless you sell for a loss and if you do that you have no one to blame other than who you see when you look in the mirror.
People hold for many reasons but they all boil down to insurance. Whether thats distrust of your countries monitary fiat, banks, government, inflation, deflation, natural or man made catastrophies, or what not you're still holding to hedge and hedging by definition is insurance.
I've said and heard it said millions of times since the run on gold began shortly after Brown's bottom, we'll NEVER know the true price of PM's until ALL the paper is flushed out. Recent events of the last 24 months suggest we are getting closer to that pivital moment when those holding paper will be left holding an empty bag.
I say this only because one would have to consider PM's recent moves all coicidence, statistically that's simply not possible, the amount of elligible gold in NY, the comsumption of PM's in countries like India and China by ordinary people, and in the past few weeks we've seen "spot or premiums" for physical go MUCH higher in some parts of the world almost signaling a disconnect from paper.
The only thing one can't "insure" themselves against by holding PMs is the tyranny of their government to effectively push the "reset" button and pull a 1930's style PM roundup at a "set" price, however I'm sure that should this occur again in the US people would less likely to turn it over being the world markets are so intertwined with eachohter. In 1930 one had no idea what PMs were worth anywhere else in the world, today we do.
Ever since aquiring the bulk of my silver at pre $17 I've bought none at over $25 and see EVERYTIME it drops to under $25 as an opportunity to buy. It is my belief that silver will strenghten again back to the mid 30s before getting pounded down again by the EURO collapse. This will in turn strengthen the US dollar and the stock market and allow the FED to ease out of QE.
Once the lemmings see the US is about 6 months behind the euro in terms of collapse only then will we know what the shiny stuff we hoard is worth.
I've been short the S&P. Am I in for another surge up when europe collapses, or just hang tight?
Personally I'm going to buy like a bandit in what I would consider the last major dip when europe floods the US for protection. I'm at the stage of liquidating anything tangible that I'm not using or going to use in order to be in a good buy position when that time comes. It means to me parting with things I've collected over the years that have appreciated in value, old bottles, some comic books, baseball cards, records, art, recreation stuff, etc, things that won't make a bit of difference in the end.
https://www.youtube.com/watch?v=dQEIYjS1ePY