If you read the whole text of my last chart on this "deflation" ratio, I pointed out that bonds could move up sharply 4 or 5 points in this type of environment and that is indeed what we saw. Also, adding to the analysis, I noticed that 4 of the last 5 deflation waves was a double-top pattern and although we are still forming the current up-leg (this week with gold going down to drive up the ratio), it certainly could mark a decent turning point here. Once the ratio starts falling, (bonds falling and gold rising) then jump on board the trade. Go short Bonds and Go Long Gold .
Saturday, November 1, 2014 5:10PM EST
The fear of inflation will not be there for years, this is a disinflation era. So I think this trade idea is a little early :) but it can be used to buy the dip though.