It looks like someone linked you here to our printer friendly page.
Please make sure you go Back to Safehaven.com
for more great articles just like this one!
Dominoes
By: Erik Swarts | Thursday, February 21, 2013
What started off as a tinder ignition in the currency markets this fall -
namely, the US dollar asserting quiet dominance over each of the major currency
crosses (first the yen, then pound, Aussie, the Swiss franc and recently the
euro); has now caught flame in the more emotional risk proxies of the hard
commodity markets - specifically, gold and silver.
And while silver typically runs the rabbit leg with gold on the risk continuum,
the market began heavily selling gold over the past few sessions. This dynamic
in turn has arrested the silver:gold ratio in the most recent swoon from undercutting
the lows from late December.
To make a long story short, we believe the recent leg lower in the precious
metals sector will likely continue - until the silver:gold ratio makes a proportional
low. Considering gold has recently led the charge in undercutting its August
low, this volatile feedback loop appears to have ample room remaining to inflict
additional collateral damages in the short term.
This perspective is also buttressed by the Value Trap comparative - which
to date has recognized very similar momentum signatures in how the financials
capitulated and led the broader market lower in 2008 and 2009.
Simply put, the miners have done the same with gold and silver here.
Although I am an active trader, I have always taken a broad perspective when
approaching the markets. I respect the Big Picture and attempt to place each
piece of information within its appropriate context and timeframe. I have found
that without this approach, there is very little understanding of ones expectations
in the market and an endless potential for risk.
I am not a stock picker - but trade the broader market itself in varying timeframes.
I want to know which way the prevailing wind is blowing, where the doldrums
can be expected and where the shoals will likely rise. I will not claim to
know which vessel is the fastest or most comfortable for passage - but I can
read the charts and know the risks.
I am not a salesperson for the market and its many wares. I observe it, contextualize
its moving parts - both visible and discrete - and interpret.
I practice Market Anthropology - Welcome to my notes.
Erik Swarts is not a registered investment advisor. Under no circumstances
should any content be used or interpreted as a recommendation for any investment,
trade or approach to the markets. Trading and investing can be hazardous to
your wealth. Any investment decisions must in all cases be made by the reader
or by his or her registered investment advisor. This is strictly for educational
and informational purposes only. All opinions expressed by Mr. Swarts are subject
to change without notice, and the reader should always obtain current information
and perform their own due diligence before making any investment or trading
decision.
