Precious Metals Were Ripe For A Pullback

If you hear one peep out of the gold community about a precious metals “takedown”“attack” or any other such aggressive or war-like language you will then be hearing some old fashioned and promotional gold bug orthodoxy. Fortunately, a casual look around the Bug-o-Sphere does not yield too many obvious conspiracy theorists or importantly, cheerleaders.

Indeed, it seems that all too many bugs expected this correction in gold, silver and the miners. That is a good thing because when the real top comes these ladies are going to be out front and greed will be running rampant (quite possibly against a negative fundamental or valuation backdrop as in 2008).

 

Instead, everybody, it seems knew about the high-risk Commitments of Traders situation for gold and silver. The CoT is not a timer, but for weeks now it had been a condition that’s been in place for a correction. It’s not a “takedown”, it’s a condition of too much speculation that had to be addressed. Now it is. Other CoT data available here.

gold cot

silver cot

As the CoT, Hulbert’s HGNSI and the extreme overbought readings first in the gold price, but then dynamically in the silver price and the miners gathered to form a high-risk situation, the time to take some profits was over the last couple of weeks, not now. Gold oriented newsletters appear to have jerked over bullish with the latest head-fake rise in the gold price. Continue reading "Precious Metals Were Ripe For A Pullback"

Macro Implications, As Silver Takes Leadership From Gold

Since we noted the initial move to break the 200 day moving average – and at least temporarily break the downtrend on August 27th – the Silver/Gold ratio (SLV/GLD) has held its breakout, looking to close the week and the month of August on a signal that we have long anticipated.

silver gold ratio

Okay, but the monthly chart of the Silver/Gold ratio makes abundantly clear that nothing has happened that has not happened before during the precious metals bear market. So that is the caveat to a macro thesis that would see a change to inflationary (as led by Silver/Gold), thereby letting commodities of all stripes and many global markets out of the barn. The monthly EMA 30 (grey dotted line) is a reasonable marker for the ratio’s post-2011 containment. The ratio’s price is below that marker. Continue reading "Macro Implications, As Silver Takes Leadership From Gold"

Silver Smashed The Target Early; Now I See 3 Options

On the 24th of July, silver had reached the target of $16.6, which I had set in June when the price was at $14.55. It finished that move way ahead of time as the time target; Now on the 2nd of September. It took the poor man’s gold only 41 bars to arrive at the destination instead of amazingly equal periods of 69 bars in AB and BC segments.

Quite often silver makes a surprise for the market as it was submissive before and now it lives in the clouds like an eagle outshining the gold.

Let’s see how you had predicted the future of silver in the poll below.

Silver

No questions, it was one of the clearest ballots on the blog. The majority with absolute dominance had chosen the success of the bullish move and were right, again! Last time one of the readers expressed his fears about those facts that the majority in the ballots predicts very well so far. Here is more fantastic proof! Maybe this is what we call the power of the Hive Mind (Collective Intelligence).

What’s next? Continue reading "Silver Smashed The Target Early; Now I See 3 Options"

Precious Metals Big Picture

While many are talking about major new bull markets in gold, silver and the miners I find it safer to set realistic goals within a still very bullish outlook. After all, we became bullish in November, had to retrench due to over-bullish sentiment and fading fundamentals in February (both situations linked here) and then have been back in the bull seat since the gold stock launch as noted on June 3rd.

The point being, I have nothing to prove to you; nothing to woo you and tempt your greed impulse about. NFTRH has simply called the sector in line with its fundamentals and technicals, and that is what we continue to do as of this day. We chart 20 quality miners (+/-) each week and note short-term targets, resistance, etc. for the miners, gold and silver routinely.

The other priority is to stay on top of the still-bullish fundamentals. Most recently silver joined the party and is probably slamming our favored theme into gear, which is for it to take over leadership from gold and potentially lead the macro to a future inflationary cycle. Easy now, that is still in the realm of potential, not yet reality. But all of this fun – and it has obviously been fun lately – takes place against a big picture that is lumbering along at its own pace.

What I like best is that due to the big picture view I can put forth a conservative 2019 plan, and it still calls for a minimum of another 70% upside for the HUI index. Within that, many of the miners we track will do much better. And within that, we have not even seen the speculative end wake up yet. Those would be the little TSX-V type penny stock bottle rockets (lottery tickets) that pull 400% rallies out of nowhere when they finally get played.

Okay, let’s reel it into the lumbering big pictures on HUI, gold, and silver. As noted, there will be bumps and pullbacks along the way. Monthly charts are not preferred for managing those situations so we’ll stick with the dailies and weeklies in NFTRH reports. But with the ferocity of the current rally (and the fundamentals behind it) it appears a good bet that a second leg to the impulsive ‘A’ leg in 2016 is underway after the beautiful consolidation that killed everyone’s spirits (as it should) since 2016. Continue reading "Precious Metals Big Picture"

Very Long-Term Silver

Just for fun because I am a chart guy who all too often bores you (and me) to death with ratio and indicator charts and all too seldom makes charts just for the fun of it anymore…

So this long-term silver chart is just for the fun of it. What do we have here?

  • A very long-term Cup & Handle; and boy what a handle. It killed the true believers years ago. I like that the 2011 (bubble) right side high is higher than the 1980 (bubble) left side high (monthly closing basis).
  • A price that has held a very long-term support level at 14, coinciding with a 79% Fib retrace (if you believe Fibs are relevant).
  • Vertical cycle lines spaced around 8 years apart that have marked the two bubble highs, a minor high in the late 80s that led to a years-long trough, a whole lot of nothing in the mid-90s and the start of a massive bull market in 2003. The current line would appear to be a marker to a low.
  • Yes, that thing from 2006 to today looks like an ugly Head & Shoulders pattern, so let’s give it its due as well. If I am wrong about an inflationary near future – and the Gold/Silver ratio still stands in defiance of an inflation trade on this day – you’d want to at least be aware of the bear’s potential.
  • Another thing I don’t care for is the decade long trough that sprung the 2003 bull market vs. the much shorter flat period leading to today. Silver has certainly not had that level of desolation to its investment landscape since the most recent bubble popped in 2011.

So okay, there are at least two caution points if you want to take the long-term chart seriously.

That said, nothing’s changed. I am bullish on silver at this time and prepared to get more bullish if/when it takes over for gold. But obviously, that very important support around 14 that silver twice tested in the last year and three times tested in the last 5 needs to hold. Continue reading "Very Long-Term Silver"