Gold/Silver Ratio

If we're going to a new high in the bond markets, then very highly likely we'll see new highs in the gold/silver ratio. Why silver miners are now able to buy gold miners is that they already had their commodity bull, which blew out in 2011.

But silver will be dragged along behind in the wake of the gold bull.

Why?

It depends entirely on the futures markets in both gold and silver. Silver had seen its day and went into backwardation chronically at the height of the bull market in that commodity. It will skip in and out of backwardation now, limiting the move. Thus is the post-nova effect if the blow-off. Same with oil. You would not say in your right mind that oil is going to start a mania bull market. More than likely we'll see a lengthy, protracted skew.

In order to verify that silver is in its post-nova effect, you need merely check the spreads:

http://quotes.ino.com/charting/index.html?s=NYMEX_SI.M16_Z20.E&t=l&a=0&w=1&v=dmax

Or perhaps the flatness of the silver futures chain:

http://finance.yahoo.com/q/fc?s=SIK16.CMX

Silver miners are MEANT to do well on the recovery after the bull market concluded, better than the commodity, because this is probably where investors in the sector will rightly place their money, and see share price appreciation. And they are rightly diversifying into the gold mining space.

There is a lenghty discussion on Palisade Radio which may rightly,wrongly attribute post-nova effects as a new bull market in silver.

http://palisaderadio.com/palisade-sprott-monthly-market-update-with-rick-rule-ricks-three-key-ingredients-for-a-100-bagger-in-this-bull-market/

The company which Rick Ruke is coyly referring to is GBN.V, of course. It does fit all of the requirements going forward. Zero debt, zero capital requirements and room for growth.

The end of the no-bid period is in evidence, as the correlation correctly picked the tops and bottoms. Will it be reliable enough to give us the correct place in the business cycle? Remains to be seen.

http://schrts.co/rvlgan

P.S. I have tried to read Veblen's 'Liesure Class" (on doing nothing) but can't manage to sit through it because it's a horrible book. Probably the most thought provoking book in the economic sphere, but horrible, like gruel.

-F6