Categories



TheLibertyMill




The Phaserl








AvatarProducts

THE GREAT PRECIOUS METALS MARKET DISCONNECT: A Ticking Time Bomb

by Steve St. Angelo, SRSRocco Report:

The Great Precious Metals Market Disconnect that took place four years ago is now a ticking TIME BOMB. While the Fed and Central Banks have been relatively successful in propping up the broader stock, bond and real estate markets, time is not on their side. The more the highly inflated markets continue higher, the more breath-taking will be the inevitable collapse.

Now, I am not just pandering hype here, there is plenty of data to support the evidence that the precious metals suffered a serious disconnect from the broader markets in 2012 and continue to be held down like a coiled spring. One of my readers forwarded me this excellent chart which shows this perfectly:

The chart is a Silver-Gold ratio (RED LINE) compared to the S&P 500 Index (BLACK LINE). Take note, this is not a Gold-Silver ratio, but the opposite. As we can see, the Silver-Gold ratio line has paralleled the S&P 500 from 1997 to 2012… very closely. However, when the Fed announced QE3 at the end of 2012, something quite interesting took place. The Silver-Gold ratio continued lower towards its bottom level, but the S&P 500 Index surged upward to a new record high.

While many precious metals investors realize that this disconnect took place, this chart shows it with more precision. Furthermore, if we look on the right side of the chart we can see the percentage level of this disconnect is 65%. This is off definitely off the charts… literally and figuratively. Again, I appreciate my reader for forwarding this chart.

After looking at this chart, I did some additional research on the S&P 500 and the silver price. If we look at the S&P 500 divided by the silver price since 1981, we have the following chart:

The current S&P 500 Index-Silver ratio is 130/1. Basically, 130 ounces of silver would buy the S&P 500 today. When silver reached nearly $50 in 2011, the S&P 500-Silver ratio was 28/1. However, if we go back to 1981 or in 1983, we can see the S&P 500-Silver ratio was 10/1.

If we applied the same 1981 S&P 500-Silver ratio today, the price of silver would be $230. That being said, the value of the S&P 500 is severally inflated. So, it is difficult to determine a realistic silver price based on a highly inflated stock index.

Regardless, the YELLOW ARROW in the chart shows that the S&P500-Silver ratio should have continued lower, not higher towards the 130/1 ratio it is currently. Unfortunately, the precious metals were not allowed to be apart of this GREAT INFLATION because there just isn’t enough physical metal to go around.. if the public started buying hand over fist.

Market Volume Indicating Something Is Really Wrong With The Markets

Not only have the precious metals disconnected from the broader stocks markets (shown in the first chart above), if we look at the volume at the S&P 500 and the silver price, we can spot another troubling sign:

After the S&P 500 hit its low of 666 points in 2009, overall trading volume continued to decline. While I have mentioned this before in a previous article, I have looked at this trend in a different way. We must remember, a healthy stock or index rises along with its trading volume. This is precisely what took place with the S&P 500 from 2000-2009. However, the opposite has taken place since 2008-9, when the U.S. financial system suffered a severe heart-attack.

Now, if we look at the Silver price chart, we see a much different picture:

As the silver price trended higher since 2000, so did its trading volume. While its trading volume spiked in 2011 (along with the price) and the fell lower, its overall trend has been higher. Again, this is nothing new, but what I realized is this important factor:

While the S&P 500 Index has been moving higher on a declining amount of trading volume, this has seriously INFLATED its true value. On the other hand, as the silver price has been moving lower or sideways as its trading volume has increased, its value has been severally DEFLATED.

Basically, the S&P 500 Index is moving higher on lower and lower volume, thus INFLATING its value. Now compare that to the Silver price which is being DEFLATED by an increasing amount of paper trading contracts.

Read More @ SRSRoccoReport.com

Help us spread the ANTIDOTE to corporate propaganda.

Please follow SGT Report on Twitter & help share the message.

25 comments to THE GREAT PRECIOUS METALS MARKET DISCONNECT: A Ticking Time Bomb

  • So lets see . We’ve had the price of precious metals hammered down since 1971, with the exception of 1980 was it ? Everyone knows this is the criminals at work,but the whole system would come crumbling down if metals were to go to there true value.
    Who, or what person, or country, is going pull down the curtain ?
    This then is the end game.
    Can someone give me a scenario where PMs go ballistic , and yet the world still carries on without a major reset ? WW 3 for example .
    Would all you experts out there help me out ?
    thank you

    • Millicent

      I am not an expert but I have been observing this situation since the 90’s. I was there when Nixon closed the Gold window. Feb 1980, Gold broke $2K, Silver broke $100…

      The manipulation started and it has been downhill ever since along with an endless stream of “experts” predicting soaring PM prices “real soon now”. The die hard “stackers” will say that they do not care but they will find that they have been throwing a Chitload of their money into a bottomless pit. Good luck if you believe the endless “real soon now” BS.

    • videoctr

      Jethro: “Can someone give me a scenario where PMs go ballistic , and yet the world still carries on without a major reset ?”

      If silver would simply go to it’s historic gold/silver ratio level, silver would be about $120.00 today. I am thinking 10:1 ratio. In the mean time we suffer with distortions in the market by the manipulators. $120 dollar silver will not tip the market in my opinion. It would bring us to a nominal position of where it should be priced. Once reached, that is our baseline for going forward. In the mean time we wait for the black swans to fly.

      • Ed_B

        A 10:1 ratio of silver to gold in ounces is close to their mined ratios but historically, this ratio has been closer to 15:1 or 16:1. I would be thrilled to see a ratio of 35 or 40 to 1 at this stage. When this next occurs, I will be swapping a substantial amount of silver for gold and will reverse that when it exceeds 75 or so next time. The beauty of such swaps is that the fee for doing so tends to be reasonable and the reward substantial. Not only that but the money we have used to buy these PMs remains in PMs without becoming cash or some other paper investment while we await additional ratio changes. That is a significant plus.

    • AgShaman

      I’ll give ya my opinion jethro.

      I think stackers had the enemy in a bad spot…and then, due to inferior tactics doubled down and were not joined by any big money types.

      Read Charles Savoie…the Pilgrims Society squashed stackers like a cockaroachaw. The FED Reserve Bank, according to a few sources…has a half billion ounces at their disposal. They are prepared in case any big players make a run on their casino. The little players (aka: stackers) have been removed from the equation long ago…they will have to wait until the angry guy with the cane and the top-hat getting his picture taken decides silver needs to stairstep higher. I’m not seeing a moonshot until the silverbugs come up with a better plan.

  • jj

    Those that promote metals come up with all sorts of nonsense to justify their positions. From the ratio of metals to US debt, souring prices in other currencies which are weakening, a higher price in China because the price includes a VAT, etc., etc., 70% of silver demand is from manufacturing, (electronics, autos, TVs, solar panels, appliances, etc.), and retail jewelry. When price rises to a certain point demand falls and then prices just like most commodities. The stackers have been brainwashed into believing unrealistic price movements. When metal prices fall it is some “cartel”. When equity prices go up it is the Plunge Protection Team propping up markets. It is all total nonsense.
    What causes price movement in markets is international capital flows. With the euro and the EU collapsing capital has been flowing into dollar based assets for the last couple of years. This has caused liquidity problems with banks there. With yields spiking on sovereign debt in the EU, the crisis has returned there and will continue thru 2017 and 2018. This will cause more capital to rotate out of these assets and into dollar based assets like the dollar and equity markets.
    The worst situation in equity markets is a normal correction before moving higher. For over three years those that promote metals have been predicting a dollar and Dow collapse, Comex default and bankruptcy, credit freezes, supply chain disruptions, markets manipulated by some “cartel” or the PPT and of course metals going to the moon. Until you realize that most of these people are simply salesmen marketing metals on the retail level using fear porn you are the sheeple. Again most of these do not trade any financial market and do not have a clue what causes price movement in markets.

  • Troy

    If silver ever went to its true value, I would sell it all and buy more land and Muscle Cars. THEN, hopefully the banksters would smash the price down to nothing again so I can buy more!!! I sold my silver in 2011 and 2012, made a lot of money, bought a place in the country. When silver bottomed at $14, I bought some more silver, so I’m hoping for another run UP…then another run DOWN!

  • Petedivine

    I think Grant Williams put out a great video on where we are and what’s coming next. If you want to know what’s up take 30 minutes to watch the video. The Petroleum-dollar is being replaced by oil for gold via the Shanghai Gold Exchange. I think Trump is lining things up for the swing. Example: The new oil pipeline from Canada. The focus on U.S. Based manufacturing. Cantherine Austin Fitts is claiming the U.S. will refocus on the Americas and reduce the size of its empire. Th fear is we would go to war someplace faraway like the South China Sea and lose. I think the Grant Williams video points out what is occurring and there are many examples reaffirming his perspective.

    http://www.zerohedge.com/news/2017-02-09/grant-williams-death-petrodollar-and-what-comes-after

  • glitter 1

    “Lord forgive them,for they know not what they do” – Jesus

    Ever thought why he said that?Yes,they were acting out of ignorance,because if they understood the truth they wouldn’t have done it.Jesus never called anyone stupid,or ignorant,or idiots(morons) because he knew that if they knew the truth they would act on the truth and not ignorance.
    The essence of true love is forgiving ignorance until the truth is learned.

    • Millicent

      “I will make a call here, then book mark it for later.
      December 2016 – Gold = at least $3,500oz / Silver = at Least $100oz”

      Hebrews 11:1

      • Eric

        Is that in inflation-adjusted terms or real terms? Do you know the difference?

        I guess not.

      • glitter 1

        Yes, and Hillary had the 95% victory in the bag according to the entire world intelligentsia,right!The entire plan(s) turned on a dime when she lost.

        Actually,The price of Gold and Silver adjusted for Dollar inflation is higher than those values,just as Eric has pointed out.It’s not a question of if,only when.My insurance is paid up,is yours.It will be the same old story,coulda,shoulda,woulda.

        As far as Hebrews 11:1, Precisely!

        • Eric

          I don’t think Millicent realizes that Silver is already up 12% this year.

          I wonder if she gets a 12% return on her savings.

          Glad I loaded up on lots of Physical Silver at the end of last year.

Leave a Reply

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>