I most often use linear scale charts for stocks, markets and indicators for their more absolute
views. But in the case below we conjure up a long-term log scale chart
showing the Gold/Silver Ratio (GSR) and the S&P 500 (SPX), as it
works better in providing a percentage-based relationship between an
indicator of market liquidity and inflation when declining and lack of
liquidity, deflation or… it has to be said, Goldilocks, when rising.
Now, when viewing the most recent Goldilocks phase, where SPX has
gone in positive correlation with the GSR we will have to suspend
disbelief that this is anything normal or natural. It was created by
will of man as first the Bernanke Fed conjured a balls out inflation out
of 2008’s deflationary destruction and then as a crowning achievement,
concocted Operation Twist in order to manipulate the bond market into
flashing this signal… ‘Nope, no inflation here!’
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