A Prediction: Gold and Gold-Silver Ratio Up, Stocks Down
A Trend Change may be in the Works
The price of gold moved up moderately, and the price of silver moved down a few cents last week. However, there were some interesting fireworks in the middle of the week. Tuesday, the prices dropped and Thursday the prices of the metals popped $23 and $0.34 respectively.
Everyone can judge the sentiment prevailing in gold and silver articles for themselves, but we think there is a growing feeling of optimism (that is a renewed fall in the dollar, which most think is a rise in gold). This goes along with a sense that the long bull run in the stock market is rolling over.
Gravity… ever since Einstein invented it, stocks occasionally go down
We are inclined to agree that the stock market may be overdue for its appointment with gravity. This is not a good business climate, and we sure don’t see where earnings growth could come from. At the same time, we see lots of forces that could cause margin compression, not to mention rising default risk in many disparate places (e.g. shale oil bonds). We are not stock market prognosticators, so treat this as nothing more than a feeling.
Gold market participants may be expecting the price of gold to move up if the stock market moves down. This would be a continuation of the pattern of the last several years, with the prices moving opposite to each other. We are inclined to agree with this. That said, to shamelessly borrow a phrase from the London Underground (we’re currently visiting London), please mind the gap between the theory and the data.
For an updated picture of the only true supply and demand data read on…
Last Week’s Market Data
First, here is the graph of the metals’ prices.
The prices of gold and silver – click to enlarge.
…click on the above link to read the rest of the article…
