Stagflation Signals Emerging

McAlvany Weekly Commentary

This week on Golden Rule Radio, we see continued market volatility, starting with gold up 5.3% and silver double that at 10.6%, bringing the gold to silver ratio down to 80:1. The dollar index drops down half a percent and below the 100 mark. Let’s take a look at where prices stand as of Wednesday, November 12: The price of gold is up about 5.3%, currently sitting at $4,200 per ounce. The price of silver is up a whopping 10.5% at $53.40 as of recording. This has actually cut the gold to silver ratio down under 80 to 1 today. Platinum is up 4.2% to $1,620. It’s still sitting about $100 above its sister metal, palladium. Palladium is up 4.5% to just around $1,500. Looking over at the paper markets… The S&P 500 is up about 1% to 6,850, inching its way back to a high. The US Dollar Index is down about 0.5%, sitting at 99.50. Precious Metals on the Move Gold put on quite a show as of mid-week, jumping about 5.3% this week and pushing back toward its recent highs. Silver didn’t just follow gold’s lead—it raced ahead, climbing more than 10.5%. We watched the gold-to-silver ratio collapse under 80, a big signal that silver’s momentum is strong. Platinum and palladium had solid weeks too, both rising over 4% and sitting near important levels. If you’re tracking metals prices for trading or stacking, this sort of across-the-board strength is exciting and—frankly—unusual. “Everything’s Up” – What’s Going On? Normally, you’d expect gold and stocks or the dollar to offset each other—but this week, it’s all up at once. That’s not what we typically see. If you’re building a diversified portfolio, you may be scratching your head: shouldn’t something be moving in the opposite direction? This synchronized rally makes us rethink traditional diversification tactics and encourages you to pay extra attention to asset allocation strategies. Stagflation Moves Center Stage Against this backdrop looms stagflation: an economic scenario where growth stagnates but inflation and unemployment stay high. As we’ve mentioned before, Hedgeye Risk Management conducts a deep analysis on a daily, weekly, monthly and quarterly basis, and they break down the economy into four different quadrants. In their model, it looks like US could be entering a “quad three” phase—code for stagflation—over the next three months. If you’ve held gold, silver, or platinum through these cycles before, you already know how these assets tend to shine (pun intended) when stagflation shows up. Recent numbers in jobs, consumer debt, and survey data bolster the story: lots of folks are uneasy about job security and debt levels, and that anxiety tends to drive interest in hard assets . The Money Supply: Fueling the Trend From our perspective, the story always comes back to money creation. We’ve watched M2 money supply charts run in tandem with gold, stocks, and real estate values. With government stimulus and fiscal spending still running hot, we don’t see this trend letting up. You may be wondering how much more “printing” and digital currency issuance is left—well, every new round supports higher asset prices, including the metals you’re holding or considering. On the technical side, both gold and silver bounced right where you’d hope: near moving averages and Fibonacci retracement marks. That’s encouraging if you’re looking at support-resistance patterns. You might be asking whether we’re about to hit the “mania” stage where the general public piles in. For now, we think it’s still early—you, as a metals investor, can take advantage of disciplined accumulation (like dollar-cost averaging), especially while broader volatility still plays out. How to Invest Now What’s the best way for you to add more ounces to your portfolio? It depends on your personal objectives. The team at McAlvany Precious Metals is happy to discuss your goals on a no-obligation, complimentary portfolio review. We can help you find opportunities for growing your portfolio as well as adding ounces through strategic ratio trades. Reach out to us at 800-525-9556.