Since silver’s ratio to gold is a key to keeping risk ‘on’ signals, inflation and even economic stability* in play, I thought I would throw up various charts from the NFTRH chart list to get some perspective. The weekly report does not lend itself to such an extended exploration of one particular indicator or asset.
First, the dramatic weekly chart we came up with a few weeks ago to make clear the parameters of a would-be oncoming correction. Silver has entered the anticipated support zone. The orange dot shows that even a deeper correction would not stop the bull because it would still be a clear ‘higher low’.
The usual weekly chart expands the view further to show how key the EMA 55 (green above, orange dotted below) is as a bull market backbone, where once it was the bear market limiter.
The next one goes even further to show why the low-mid 18’s is a key support area. It is formed by the resistance of 2010 and the support of 2013 and 2014, which gave way and was finally exceeded several weeks ago. So even though we allow for the EMA 55 to be hit in the low 17’s that is no done deal. Silver is at support.
This despite the “no man’s land” that we noted daily silver to be in currently. We can however, note that silver lost the 50 day averages temporarily twice before in 2016.
So the bottom line on the above is that silver can drop to near 17 and still be on the bull. What’s more, the weekly EMA 55 and the daily trend line and lateral support are in confluence on the low 17’s. But the weekly charts also show the low-mid 18’s as a long-term support area as well. The daily, obviously, does not. So let’s manage risk but keep open minds with the given parameters in mind.
Moving on, despite the recent hits, silver vs. SPX still looks constructive. Here’s the weekly view. It is a new uptrend in 2016 that has been consolidating downward in normal looking fashion for 7 weeks.
Silver vs. gold (weekly) in the top panel is still in a stair step uptrend. The key, much like the EMA 55 for nominal silver, is the EMA 80, which was the bear market ball and chain. Commodities will generally go with Silver-Gold.
Finally, a look at Silver-Gold from a lateral support perspective. It has dropped below the support line.
Let’s dial out to see just how long-term this support area is.
This has been a very long-term support/resistance area. So it is key, not only for the precious metals and commodities, but for much of the risk ‘on’ world and the inflation theme, that the EMA 80 hold up and the ratio get back above the lateral support in fairly short order.
* Speaking of economic stability, I just had a chance to check the July SEMI book-to-bill data and the bookings were again very strong; the strongest yet since the up turn. NFTRH 410 will go into detail about the Semi sector. But as an indicator, it is still flashing green as it has done since well before the BREXIT negativity overtook the markets. A rising Silver-Gold ratio would be a good accompaniment to that if we are to proceed on a theme of inflationary economic stability/growth. Yellen is on deck and who knows what is going to emanate from her orifice; but thus far the Fed has remained dovish in its actions while jawboning tough in its talk. Cue the old nugget: “Actions speak louder than words.”