The gold-silver ratio (GSR), when rising, as we well know is a sign of impending stress in the system. It is a sign of impending liquidation. What asset stands to benefit from frightened speculators piling out headlong from the speculation game? US Treasuries (represented on the chart by TLT), worthless broken promises that they are.The GSR is an early warning indicator and while nothing is definitive here, it is hinting at a bottom, either now or after a near term decline to new lows and 62% retrace to a pretty clear support shelf.
This fits with the idea that any rally that ignites now is not likely to be sustainable because the GSR among other sentiment indicators is not red lined, not extreme.
In NFTRH21, I outlined two potential scenarios involving the US dollar. One is near term bullish for the dollar and longer term very bearish. The other is near term bearish and longer term bullish (FOREX is a price and confidence game, after all).
One could envision the dollar breaking to the upside now, gold outperforming silver, the TLT rebounding as the next deflationary panic kicks in. This scenario has its own distinct set of implications (and requisite actions by investors).
Then there is the other scenario, which involves a near term declining dollar, a stock market rebound and then holy hell unleashed perhaps within weeks or a very few months. Edit (9:45) and of course the alternate scenario has its own unique set of implications and requisite actions. Edit (12:07) PS, to subscribers... I have covered the silver short by selling the ZSL 200% inverse tool. Now I can be a one way gold bug again, having added to a couple positions on this correction and looking to add more.
