"As a technician, I feel that there are few analysts that offer value for me, but you do. Your work on Gold ratios has helped my analysis greatly." --Jordan Roy-Byrne, CMT (The Daily Gold) 4.9.10

Monday, December 19, 2011

Liquidity/Fear indicators at odds...

Speaking of the VIX, traditionally it should run with the gold-silver ratio (GSR... indicates draining liquidity) and the USD (beneficiary of draining liquidity) as market players hedge their bets against volatility.

Look at the beautiful correlation of all 3 leading into Armageddon '08.  Then, in the mini hysteria that pressured Bernanke into QE2, the all important GSR failed to confirm and this non confirmation manifested into a policy induced asset price party.  This time we have a rising GSR, a rising Uncle Buck and a lame VIX.

What to read into it?  I don't really know yet, but it could mean that risk for broad market bulls is exceedingly high.  Or maybe it could mean that the fix is in and just waiting for a trigger.  Or maybe it means both.  In fact, it probably means both.

Fun stuff.


1 comment:

  1. Or maybe it's because nobody's purchasing new puts and calls because it's Christmas. Look under the hood and check what $VIX is made of. I'd trust USD and GSR more right now. Or even $HUI or GLDX.