The NFTRH plan is and has been that the gold mining sector, due to the fundamentals implied by the handy graphic below, could eventually lead a world full of inflatables higher. The miners, leveraging gold’s outperformance to most everything else during liquidity crises and even deflation, move first and draw in the inflationist bugs later. If the macro goes inflationary the miners will likely continue to perform well (ref. the 2003-2008 period) but would no longer be the go-to sector.
Then the play theoretically spreads far afield into commodities, global stocks (e.g. EM, Asia, etc.) and US markets/sectors that tend to benefit from the rising long-term yields (e.g. banks, materials, etc.) resulting from inflationary macro signaling. These would be aspects of a sustainable inflation/reflation trade IF the signals are in order. So let’s take a look at some of them.
The Silver/Gold Ratio (SGR), a reflationary risk ‘on’ indicator has hit our upside target, which we have tracked in NFTRH updates over the last few weeks using the yellow box highlighting an area near the down-trending 200-day moving average that would at least temporarily halt the party. The SGR is pausing and pulling back a bit here. All normal so far. Continue reading "Silver/Gold Ratio Hits Target"