A Measure of the RISK TRADE

Chatter is surfacing that some guys are looking for a sharp reversal in the Dollar and some, in anticipation of that, are lifting risk trades. This might help explain the loss of money flows into the overall commodity sector.

Note the sharp fall in the ratio as evidence that money is rushing out of silver and into the bond market.

I suspect that the monetary authorities are strongly welcoming this especially in light of their announcement of an end to QE2 in June. I am of the opinion that once the bond buying program does end (assuming it does and that is an open question if the stock market drops sharply), I find it difficult to believe that there is going to be substantial buying below the bonds, especially at their current elevated levels.

The elevated margin requirements for silver have basically destroyed the entire commodity complex rally as funds and other long side specs are being destroyed by the deep losses in their silver positions and are now rushing to blindly sell positions in the rest of the complex to stem the bleeding.