A Reversal In the Silver/Gold Ratio Would Be the Trigger

The question is, will the recent dive bomb* in the silver price vs. the gold price prove to be a pivotal event, as it did in 2020? Will a reversal in the Silver/Gold ratio come from this drop? If so, given relatively less downside intensity than 2020, I’d expect the upside to be highly tradable, but more moderate (sorry my silver buggish friends).

Silver, with more cyclical industrial utility than gold, would lead if inflationary pressures build up and/or renewed enthusiasm against a coming recession/bust were to manifest.

* Outside of the P-51 Mustang, the Junkers JU87 “Stuka” dive bomber was this WWII fighter dork’s favorite of the era (it’s a bomber, but work with me here). It was so awkward and clumsy.

Further implications would be for strength in the precious metals miners, despite a currently in process healthy pullback, and further weakness in the US dollar, which has been bearish for the entirety of Trump’s term. As a side note, USD is due for a bounce or rally. But “due” implies a time variable.

Meanwhile, the TSX-V index, home of the most speculative Canadian commodity/resource related stocks, has ticked a new high for its bottom/upturn cycle. As long as the break holds, the next target is resistance (now visible on this daily chart) at 680. Da ‘V’ seems to think silver will take over for gold, potentially providing a backdrop for wider commodity participation.

Only time will tell if this will play out, but it’s interesting goings-on in a macro stimulated by an awful lot of geopolitical input.

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