Tonight I would like to update a few ratio combo charts as several are at a crossroad, which may shed some light on where the PM complex may be headed next. A couple of the ratio combo charts worked out extremely well in calling a bottom in January of 2016.
Lets start with the TLT:TIP ratio combo chart we looked at recently which shows if we’re experiencing inflation or deflation. When the ratio in black is falling it’s showing deflation and when it’s rising it’s showing inflation. From the 2011 high the general trend has been for deflation. About a year ago you can see the black ratio was rising in a pretty strong move up, but late last year and the first part of this year the ratio topped out and has begun to fall. The red arrows shows how the ratio is reversing symmetry down over the same area on the way up. For the time being there isn’t much in the way of support.
At the bottom of the chart I added the CRB index and the GDX which also topped out in 2011 and have been trending down with the black ratio. If the TLT:TIP ratio keeps falling, will the CRB and GDX keep performing in a similar manner as they have since their 2011 bear market highs? The 30 week ema is the first line of resistance they will need to overcome followed by the top rail of the 2011 bear market downtrend channel.
This post was published at GoldSeek on 22 June 2017.
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