{"id":27532,"date":"2014-05-27T10:27:49","date_gmt":"2014-05-27T14:27:49","guid":{"rendered":"http:\/\/www.ino.com\/blog\/?p=27532"},"modified":"2014-05-27T10:27:49","modified_gmt":"2014-05-27T14:27:49","slug":"gold-silver-the-macro","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2014\/05\/gold-silver-the-macro\/","title":{"rendered":"Gold, Silver & the Macro"},"content":{"rendered":"

Those micro managing the precious metals are fixating on the Symmetrical Triangle (bearish continuation) and a coming 'Death Cross' of the MA 50 below the MA 200.<\/p>\n

The Sym-Tri has been apparent for about three weeks and the Death Cross is hype put forth by those who would make grand TA statements.\u00a0 The Death Cross means next to nothing.\u00a0 I mean, how much good did the Golden<\/em> Cross that the \"community\" was pumping in March end up doing?<\/p>\n

\"gold\"<\/a><\/p>\n

Gold is bearish and has been bearish by its technicals (below the 50 and 200 MA\u2019s), and ever since the economic soft patch was was put behind us (cold weather, remember?) by its apparent macro fundamentals as well.\u00a0 NFTRH<\/a> has been keeping this situation locked down and in a box for future reference.\u00a0 The box will be opened when the time is right.<\/p>\n

Meanwhile, I'd suggest that people avoid micro managing gold.\u00a0 It is not an idol or a religion, and while there is a whole industry champing at the bit to begin promoting it again, it is just a tool for retaining the value of money.\u00a0 Sometimes tools sit in the toolbox.<\/p>\n

As for silver\u2026<\/p>\n

\"silver\"<\/a><\/p>\n

Poor man's gold is scuttling along the floor of what is major support dating back to 2009-2010.\u00a0 The daily chart above shows two previous failures to get above the SMA 50.\u00a0 Silver is going to make an important break upward or downward within a matter of weeks.\u00a0 Check out the weekly chart for reference\u2026<\/p>\n

\"silver.weekly\"<\/a><\/p>\n

With the bearish analysis showing up out there you\u2019d think silver had already lost the big picture.\u00a0 No, all the noise is from technical people keeping the masses enthralled with prognostications based on daily charts like those above.<\/p>\n

Facts:<\/strong><\/p>\n

    \n
  1. Silver is just above critical long term support<\/li>\n
  2. Silver has not broken down from this support<\/li>\n
  3. Silver has not broken up from trend line resistance*<\/li>\n
  4. One of these must give way in the next several weeks<\/li>\n
  5. No amount of pom pom waving or doom saying is going to influence it in one direction or the other<\/li>\n<\/ol>\n

    So why not realize that the precious metals are just another asset class that is in a holding pattern, pending further developments?\u00a0 Why not tune out the caricatures in the media that have been wrong for years now and understand gold\u2019s real fundamentals and silver\u2019s relationship to gold within the macro processes?<\/p>\n

    Indeed, why do not gold and silver bugs just relax and wait for macro signals like the answer to the question 'what is silver going to do in relation to gold?'<\/p>\n

    \"sgr\"<\/a><\/p>\n

    There is a world of assets out there depending on the answer to that and similar questions that would indicate whether the next phase is going to be inflationary or deflationary.\u00a0 Why, even stock market participants should be paying attention to the macro.<\/p>\n

    Notice how the S&P 500 (bottom panel), which had been in positive correlation with commodities (2nd panel) and the Silver-Gold ratio (SGR) has taken advantage of global deflationary pressure over the last couple of years and actually gone against the outgoing SGR and commodity tide.\u00a0 That would be our little friend Goldilocks enjoying her \u2018just right\u2019 porridge.<\/p>\n

    We are working on a thesis that a big picture breakdown in the SGR (breakout in the Gold-Silver ratio) would end Goldilocks, however as deflationary pressures mount.\u00a0 Conversely, if silver breaks out vs. gold we would be talking about an inflationary phase.\u00a0 Either way, Goldilocks gets kicked out of the house.<\/p>\n

    The gold and silver ratios are just one tool in the box.\u00a0 As Bob Hoye describes them, a sort of metals related credit spread.\u00a0 Speaking of which, actual credit (bond) spreads are in play along with several other tools in helping determine what the coming phase is going to be.<\/p>\n

    Nothing is as simple as one post can try to make it appear, so I will not try.\u00a0 There are so many moving parts in play and they seem to be coming down to the next several weeks or few months, as indicated by the weekly chart of silver above.\u00a0 So the point of this post is\u2026<\/p>\n