"No warning can save people determined to grow suddently rich" - Lord Overstone

  • 13 mins Are Alt-Coins On The Verge Of A Break Out?
  • 2 hours What Should Gold Investors Expect From The New Fed Chair?
  • 3 hours Who Will Pay For Trump's $60 Billion China Tariffs?
  • 19 hours Vladimir Putin’s Mysterious Fortune
  • 20 hours Cryptos Resist Social Media Crackdown
  • 21 hours The Death Of Dodd-Frank
  • 22 hours Bitcoin Bounces Back Ahead Of G20 Meeting
  • 23 hours Trump's Trade War Nears Boiling Point
  • 1 day Will April Be A Turning Point For Precious Metals?
  • 1 day Economic Pressures Weigh On Banks And Borrowers
  • 1 day U.S. Political Uncertainty Keeps Stock Markets On Edge
  • 2 days Gold: The Religion Of Currency
  • 3 days Economists Polarized On Trump’s Tariff Plan
  • 4 days Why Are Investors Overlooking Gold Stocks?
  • 4 days The App That Democratized Trading Is Now Worth $5B
  • 4 days Super-Cycles: Why Gold Is Set For A Breakout
  • 4 days U.S. Sanctions Russia For Election Meddling And Cyberattacks
  • 4 days Snap Shares Tank Over ‘Slap Rihanna’ Campaign
  • 4 days How Low Can Bitcoin Go?
  • 4 days Amazon’s Japan HQ Raided In Anti-Monopoly Push
Consumer Confidence Fails To Boost Retail Sales

Consumer Confidence Fails To Boost Retail Sales

Consumer confidence measured by market…

Why Aren’t Millennials Investing?

Why Aren’t Millennials Investing?

After watching previous generations take…

Return To 'Normalcy'

I like to remind myself every now and then why the analogy has worked so well between silver and the Nasdaq market - circa 2000 and now 2001. It's not just the charts that have great similarities - it's the overarching psychology of the boom and bust cycle and the ratio contrasts to their larger sibling (gold & SPX) markets that has provided a long-term roadmap with considerable correlations. And while the charts certainly represent that emotionality in characteristics such as the parabolic tops, you can find other sentiment and behavioral comparatives in the charts.

Complete market Cycle

I believe we are currently experiencing a very close parallel to how the Nasdaq traded through the first month of January 2001, after a gut wrenching performance the previous year. Like silver, it was a slide to the lows for the Nasdaq coming into 2001. A funny thing though happened by simply crossing over into the new year. After a miserable opening session on January 2nd - the Nasdaq went on to rally more than 27% by its third week in January. Traders and Dot-com companies left for dead a few weeks back were once again resurrected believers that the correction was over and a return to "normalcy" was upon them.

Unfortunately, they were sadly mistaken.

NDX 2000/2001

SLV 2011-2012

To date, silver has corrected and retraced its losses along very similar pivots to the Nasdaq as expressed in the respective ratio charts.

NDX:SPX Ratio 2000/2001

Should the analog continue to prove prescient, February will usher in a return to normalcy, whereas silver strongly underperforms gold. Considering where the equities markets now stand and what this ratio typically implies towards the overall risk appetites for traders, the ephemeral highs now being felt by the impressions and speculation of further easing, will likely give way to another deflationary tide.

SLV:GLD Ratio 2011-2012

NASDAQ/Silver parabolic Top Study

As always, stay frosty.


Back to homepage

Leave a comment

Leave a comment

Sign Up For The Safehaven Newsletter