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And the Gold & Silver charts Print
Written by Site admin   

20/07/2020

The Charts and Gold?

It becomes a one way bet. But beware, Gold is always vulnerable to a twitchy Federal Reserve which might want to knock it back from time to time, particularly as it's within a whisker of the 2011 high.

Does it have a target?

These are always difficult to predict once past old highs. However, there is an alternative view involving an eventual new Gold standard, as Jim Rickardssuggests here.

For traders, Silver just might be the better bet.As mentioned at the start of the year, Silver has been under-priced in relation to gold. The Silver/Gold ratio meanders historically at around the 60 level, but has recently been as high as double that at 120+.

The ratio is now settling back into a down trend, currently at 93. The Silver chart is way behind Gold. Today it's starting a catch up that could well have long legs as the ratio gradually slips back to its historical norms.

Inflation has only one way to go.Yes, there is clearly a global down turn in trade and hence GDP growth is unlikely to come back to 2% any time soon, many see this as a drag on Gold, but.....

Inflation likes reduced supply (companies closed down, global supply lines cut back, etc.). It also likes increased demand and purchasing power from greater money availability. Responses from governments are supplying both in bucket loads.

The 'Helicopter' money andModern Monetary Theorybrigade are seeing their dreams come true. As long as money, and it's purchasing power, is handed out without any corresponding increase in real economic growth, the real arbiter of value, the Gold and Silver price, has only one way to go.

 

From the blog

Canada tightens...

 We just had Canada pop their overnight interest rate up from 0.5 to 0.75%, a 25 basis point rise as they say in the trade. It's taken them 7 years to do it and marks the end ultra cheap money that kicked off the crazy housing market with valuations way above the reach of the average Canadian.  Now they are confident the economy is sound and the oil price, on which the economy largely depends, has stabilised in recent months. So much for the announcement, you can read the story here, but it's the chart USDCAD that has been looking very interesting for some time.

Read more...

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