Monday, March 15, 2010

Chart of the day is...

....the gold/silver ratio, which is becoming a bit of a Monday morning fixture.

So this time I thought we could take in the longer view, on an X-axis that takes in what da bugz used to call the "traditional" ratio of 50:1*, the big deflationary spike we saw thanks to messrs Bear, Stearns, Lehman and Brothers, and the recent action that's flitted twixt 60X and 70X.

What does it all mean? I dunno dude, but considering all those fascinating squiggylines on offer perhaps the low point being reached by the RSI is the biggest tell. The reaction need not be violent (see Oct '09 for example) but if the GSR starts rising it would be another period of fear outgunning greed to some extent and you'd see that reflected in the broader markets , too.



*though the real hardcore dudes will take you back 300 years or so and point to a 15:1 ratio, then moan about why silver isn't priced at $75/oz right now without worrying about all that byproduct credit silver from zinc mines that's produced these days