NFTRH; Gold-Silver Ratio & Funda’s

Gold-Silver Ratio

The gold-silver ratio is rising today, which is not a bad thing for gold stocks as long as it is rising in the context of gold out performing silver to the upside.

HUI never reached the significant resistance zone at 245 to 250, so maybe that is its intention.  Nothing has changed with regard to that level being important resistance.

Beyond that level, keep in mind that it is a rise above 261.36 (March high) that technically sets a bull market in motion.

To be brave enough hold to and through that point a bull has to factor the hard bearish lurch in the CoT structure of silver and to a somewhat lesser degree, in gold.  Also, if there is a lurch higher in the precious metals equities, we will be over bought once again.

Unless we can account for a rational reason that the CoT spike to bearish is nothing to be concerned about and unless more fundamentals start coming in line, the risk will continue to be there from the noted resistance levels.

Macro Fundamentals

  • Gold vs. stock market is up today
  • Gold vs. commodities is up today
  • Gold vs. crude oil (important for miners) is up today

And of course with gold vs. silver being up and interestingly, the TIP-TLT ‘inflation expectations’ indicator down we might think about some [broad] market turbulence to come if gold starts rising vs. silver (whether or not they rise or fall nominally) for more than a short bounce.

Something is happening on the macro and as usual gold is right in the middle of it.  On the very short term however, I am not sure about its nature with respect to an inflation/deflation discussion.  But a rising gold-silver ratio could bring about improving gold stock fundamentals if financial markets positively correlated to the economy come under pressure.

Ultimately what makes me a firm bull (i.e. more holder, less trader) is a) fundamentals and b) a higher high to March (in combination).