“…Watch silver vs. gold and then watch for changes to come.
- If the Gold/Silver ratio breaks down from its historical high region in 2019 you’ll know that a big inflation trade is brewing out of the current market stress.
- If it breaks out and stays out, nice to know ya, it would be a panic mode for the Fed and likely a massive liquidation of asset markets for the rest of us.”
Prepared by Lorimer Wilson, editor of munKNEE.com – Your KEY To Making Money!
[Editor’s Note: This version* of the original article by Gary Tanashian has been edited ([ ]), restructured and abridged (…) by 37% for a FASTER – and easier – read. Please note: This complete paragraph must be included in any re-posting to avoid copyright infringement.]
“Below is an all too busy long-term (monthly) view of the Gold/Silver ratio, along with some key nominal markets.
The blue shaded zone is a view of the most recent post-inflationary period after Ben Bernanke killed macro inflation signals in 2011 as commodities (and silver) blew out and the ultimate in genius-like bond market manipulation, Operation Twist, was inflicted on the macro. Voila! No inflation. It is, by the way, no coincidence whatsoever that there is a red arrow directly on top of that blow out in H1 2011. That was when the herd thought “silver to 100!” and Bill Gross shorted the long bond in anticipation of runaway inflation. No, Bernanke could not have that. Instead, we had a long phase of mostly Goldilocks style stock appreciation in the U.S. while the Gold/Silver ratio rose in line with tight global liquidity and global markets underperformed while commodities and precious metals got clobbered…
The Continuum in the lower panel above symbolizes the deflationary backbone that has been in place for decades. I maintain that this is a firm marker against which the Fed inflates money supplies, manipulates bonds and by extension manipulates inflation signals…
We remain in a deflationary phase against which the Fed would seek to be permitted (by the bond market) to inflate once again. Had the yield broken out amid rising stock prices and a booming economy pushing costs (and inflationary effects) the gig would have been up. Yet still, people ask why Powell was so “out of touch” with reality. HE. WAS. NOT…
It would be best for all involved that we continue along the Continuum, with the backbone holding firm once again amid some market and economic stress and prepare for the Fed to do its thing later on, in the way its thing has been done for decades now… [The major question is, however, just] how long can the Continuum… continue before inflation (enter Ludwig von Mises’ Crack-up-Boom) gets out of control and decades of inflated chickens come home to roost? That is what staring at the above chart says to me.”
(*The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.)
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