Tuesday, May 21, 2013

Strong Suggestions for the Next Six Months

Look at these two pieces of data and add it to the rest of your data depository:

From ZeroHedge

In general when equity prices are rising and credit spreads are tightening, the ratio of gold-to-silver prices falls as 'fear' ebbs away and confidence in a real economy returns as exemplified by the rise of risk assets. Twice before we have seen the anti-correlation of stocks and gold/silver flip to a highly correlated regime, and as Bloomberg's Chart of the Day notes, each time it suggested "stocks were due to snap". It seems a concerted push above and a 50x ratio (for gold-to-silver) tends to exhibit notably risk-off behavior. Currently, the S&P 500 and Gold-to-Silver ratio have been highly correlated since this last rally began in stocks and as HSBC's Charles Morris notes, this suggests a 'snap' in risk assets within six months.

 And this from King World News regarding Soros calls on the GDX:

So he’s risking his money in a relatively short period of time.  The disclosure in the filing does not give you the duration of the call option, but it should logically be listed as a warrant if it was more than a year.  And having structured these kinds of products back in my days on Wall Street, and sold them to clients, typically options of this type have anywhere from a 30 day to a six month duration.

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