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Gold/Silver Ratio Warning

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Bob Hoye of Institutional Advisors just posted this:

 

Gold/Silver Ratio Warning

 

The reversal to rising will signal the resumption of credit

troubles, when silver could again do some big plunges relative

to gold

 

At times, the gold/silver ratio behaves somewhat like a credit spread, and over

more than three centuries when it turns up in a maturing speculative climate

the action is close to failing. This appears to be the case today and as this

memo is completed the ratio is at 67.3 and well into "danger" territory.

Aggressive selling of most speculative plays is the natural thing to do.

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How can Hoye be so certain that this little blip (noise) in the ratio is such an important signal? I really can't take this serious.

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The reversal in the ratio confirms the probability that the credit

contraction would resume by mid-year.

 

Fundamentally, I tend to agree with that.

But it isnt fully confirmed by the chart yet IMHO

 

yueminjun.jpg

 

I think you can use the Gold-to-Bonds ratio in a similar way.

 

Presently, as if falls, it is showing a brief swing back towards DEFLATION

 

Gold-to-TLT (bonds) ratio

xxxo.png

 

I think you should use the direction of the 11.week.MA as the indication of what is

actually happening in the markets, and it is still rising now

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How can Hoye be so certain that this little blip (noise) in the ratio is such an important signal? I really can't take this serious.

I agree with Hoye that the gold/silver ratio is a very significant one to watch, but kind of disagree with him that the trend has reversed.

 

The markets are jittery about the economy, employment and deflation at the moment but it would not take much, perhaps another round of treasury buying by Bernanke, to see the market resume the inflation trade [and the dollar weakened]. This current correction we see now in the markets might be completed shortly, with investors going back into stocks and commodities which would also see a lower silver/gold ratio.

 

At a later date we may well see the ratio whiplash from 50 back to 80 on the back of a deflation scare proper. Obviously, you would want to trade silver for gold beforehand.

 

gold_2_year_silver.png

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I think the diversion between the direction of the G/S ratio and the direction of equities over the past week or so is very important. The G/S may well test the lows again, but (also the increased vol) the movements are telling us a change may be afoot.

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The reversal in the ratio confirms the probability that the credit

contraction would resume by mid-year.

 

Fundamentally, I tend to agree with that.

But it isnt fully confirmed by the chart yet IMHO

 

yueminjun.jpg

Gold / Silver Ratio 69.86

 

seems to have broken above the trend line now?

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At a later date we may well see the ratio whiplash from 50 back to 80 on the back of a deflation scare proper. Obviously, you would want to trade silver for gold beforehand.

 

The question I keep asking myself is, "When?" I regret not trading silver for gold in early June.

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Gold / Silver Ratio 69.86

seems to have broken above the trend line now?

 

Yes, it has broken above the channel on the Daily chart.

Now it will need to break 72 or so, to give a signal on the Weekly chart

 

zzzg.png

 

As I said before, I am agree with the Fundamental part of this argument.

And a break in the weekly channel may give some idea of how long this new trend

will persist.

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Gold-Silver-Ratio_GUESS.png

 

Silver or Palladium? Silver or Palladium? Got to buy something!

Anything more on the Palladium in reactors story? I notice you called it "my lottery ticket". What do you think are the potential upsides to investing in Palladium?

 

Some say silver will run out in around 15 years, so should be very profitable longer term.

 

100% etc.

 

Nick

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David Morgan's latest discussing the ratio of the metals in the earths crust on howe street:

 

The Gold to Silver Ratio

 

About 5mins in he states that most of the easy to get to silver has been mined already and that in terms of mining out remaining supplies the ratio of the two metals is just 8 to 1! There will surely come a day like no other when silver blasts off through the stratosphere from these levels. Who knows when, might be many years. All I know is I will be sitting happily with my eagles and philharmonics.

 

 

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Anything more on the Palladium in reactors story? I notice you called it "my lottery ticket". What do you think are the potential upsides to investing in Palladium?

...

Maybe like silver, maybe better. I think there haven't been any new stories out recently.

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Well now we are back at 68:1... not sure I see it going to 88:1 from here.

I realise Butler is a perma bull but the stuff about the COT report and upcoming CFTC ruling are compelling.

 

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Yes, it has broken above the channel on the Daily chart.

Now it will need to break 72 or so, to give a signal on the Weekly chart

As I said before, I am agree with the Fundamental part of this argument.

And a break in the weekly channel may give some idea of how long this new trend

will persist.

 

72-ish held, and now we are seeing a pullback

1248751041088969100.png

 

It looks like the Ratio might fall to 66.5 or so within a few days.

After that, you might see a strong surge up. That would not surprise me,

and could come along with a renewed slide in in stocks

 

Watch Friday's GNP figure. It could provide a trigger

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I wonder whether gold is leading silver on the way up. Hence the ratio rose as silver lagged, now has turned downwards as silver plays catch up, and moves faster than gold.

 

Looking at EUR gold and silver, I have a feeling the bottom may already be in, or if it comes next month may not be much lower.

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So, who got it @$$-backwards here? Or is it too early to judge? :)

Just listened to his latest on howestreet.com. He still seems to expect massive deleveraging to happen in October and reading between the lines he still seems to think that will result in a widening of the GS ratio. His initial "warning" was well wide of the mark. Lets see if his "in the fall" premonitions are any better.

 

I traded a very small amount of silver for gold at 65 via goldmoney.

But as I have said previously I always keep hold of my physical silver.

My eagles/phils/brits aint going anywhere!

 

 

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I am also concerned about a reversal in the market. The 60 million dollar question is the timing of it. I wonder if we will see another wave up with the Dow through 10000 and the ratio near 50 before deleveraging kicks in again. Accordingly, I will be jumping to gold from silver at around 50.

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Well 7 months on here we are back over 66 on the GS ratio :lol:

We never did get to Hoyes 88. Still possible?

 

Possible, yes.

 

Probable? Hmmm.

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In the the start of Sep 09, higher highs and higher lows....the trend may well be up..

 

Didnt Hoye mention 100 not 88?

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In the the start of Sep 09, higher highs and higher lows....the trend may well be up..

 

Didnt Hoye mention 100 not 88?

Yep and he mentions that as a distinct possibility again on his latest howestreet.com interview. Suggested shorting silver stocks as a way to trade this decline.

 

Before I get shot to pieces I am merely reporting what I am hearing. My silver is safely stored here and is not for sale!

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Yep and he mentions that as a distinct possibility again on his latest howestreet.com interview. Suggested shorting silver stocks as a way to trade this decline.

 

Before I get shot to pieces I am merely reporting what I am hearing. My silver is safely stored here and is not for sale!

 

lol

 

i treat hoye being bearish on silver as a contrary indicator now. In fact, the more silver bearish articles / commentators that come out now the better, and the cream on the cake will be the re-appearance of ker telling us that it is going to $6. Yay, 6 glorious fiat dollars for an ounce of physical silver metal, yay rejoice!

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lol

 

i treat hoye being bearish on silver as a contrary indicator now. In fact, the more silver bearish articles / commentators that come out now the better, and the cream on the cake will be the re-appearance of ker telling us that it is going to $6. Yay, 6 glorious fiat dollars for an ounce of physical silver metal, yay rejoice!

 

:D

 

do you know I am 65% in physical silver & not worried one bit. I expected volatility & that's exactly what I am seeing. ;)

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