The big news is that the gold-silver ratio closed at 80. This is not only a new high for the move. It’s higher than it has been since 2008.

It’s also exactly what Monetary Metals has been calling for. Last week, we said the gold fundamental was $1,450 and the silver fundamental was $14.90 (i.e. a fundamental value for the ratio over 97 last week). This week, the ratio moved up, and it’s now 1.3 points closer. In other words, silver got cheaper when measured in gold terms.

We had a soggy dollars spotting this week (our term for an article that’s misleading or based on false assumptions). A gold mining executive declared that the people are losing faith in the central banks. The take-away was clear: the gold trade is on again! buy gold now, to make big profit$.

It should be bloody obvious that he just wants you to bid up the price of the product his company sells (i.e. gold). He wants to make money (i.e. dollars).

But that aside, our larger point is that articles like this (and there are plenty of them) are quite ironic. When there is a loss of faith, there will be a great paradigm shift. No longer will people think of gold going up, but of the dollar going down (and finally, collapsing). That is not occurring today. These articles exist just to rationalize a trade. The dollar still enjoys the full faith of everyone—most especially the gold bugs who need a currency in which to measure the worth of their gold, and in which to take their profit$ when they sell.

Read on for the only true picture of the gold and silver supply and demand fundamentals…

But first, here’s the graph of the metals’ prices.

The Prices of Gold and Silver

We are interested in the changing equilibrium created when some market participants are accumulating hoards and others are dishoarding. Of course, what makes it exciting is that speculators can (temporarily) exaggerate or fight against the trend. The speculators are often acting on rumors, technical analysis, or partial data about flows into or out of one corner of the market. That kind of information can’t tell them whether the globe, on net, is hoarding or dishoarding.