NFTRH Interim Update 3.5.13, Silver Gold Ratio and its Implications

If silver out performs gold, the entire precious metals sector stands a chance to rise with the silver-gold ratio.  This is not a comment on an important bottom being in place, because I’d rather see HUI make the low 300’s and this ratio come to the lower support line, which coincides with the downtrend channel bottom.

Silver-Gold Ratio, daily chart

But a rise in the ratio to the top channel line would get gold bugs feeling like they might miss THE rally if the gold stocks rise with the ratio.  With all the value showing up in the quality items in the sector, this might even be a valid concern.  The best stuff may have bottomed.

Prospective buyers might consider that we will not be able to pick the exact bottom and have an overall plan to scale in.  I have bought nothing in the precious metals sector yet but I wanted to put this scenario in front of you so that we are not caught being too greedy as bottom feeders.  If silver leads gold (still not definitive), it would be a good thing for both the precious metals and the broad market in the near term.

I still favor HUI low 300’s ultimately, however.  But again, how often does one just pick a bottom?  Not often.  So this is one of those perspective updates, painting in a little definition to go with the more extensive update this morning.

[edit] In the time it took to write this update, silver and gold have both sagged noticeably.  Obviously, if the ratio fails to rise, it is back on the HUI low 300’s watch.