NFTRH; Precious Metal Indicator Views & 3 Amigo Update

A few ratio indicators to keep an eye on as gold and silver continue to tank and the miners remain nominally weak.

GDX/GLD ratio is making me feel braver still. A complete washout in the miners vs. gold has gained some attention in the TA community. The attention is negative about gold stocks; but the time for negativity was back in October when GDX/GLD lost the moving averages for the 2nd time. Now, time to be brave… in thought or in action if you can take more volatility. HUI, shaded in the background shows clearly that rallies have come from this level of breakdown (May) or even less severe levels (March & July).

gdx, gld

The Gold/Silver ratio (GSR) is still breaking upward and yet the stock market is fine. It’s a Goldilocks thing for now, like so much of the post-Op/Twist era has been.

gld, slv

Some commodities have weakened however, and that has DBC putting on a hard test of its SMA 50. That would be in line with the GSR spike.


Well, the ‘stock market vs. gold’ Amigo is still on message.

spy, gld

Maybe this one just might get to its ultimate destination in the not too distant future, after all.

spx, gold

10yr & 30yr yields are up today and that keeps that Amigo in play as well.

And we all know the yield curve is still hard down trending. So that one is still in play also. In a public article, we noted that if the Amigos abort their destinations the rising GSR would be dangerous beyond precious metals and commodities. But these 3 indicators are resisting that scenario today.

Bottom Line

We are on a hard decline in the precious metals that I think will prove a precursor to a pretty good rally. No sign of a bottom yet from a volume standpoint. In other words, a final washout on volume could still be out ahead. At least that’s usually how the gold sector washes out. But I think limits are starting to be pushed on the correction.

The macro backdrop does not yet appear in danger as the 3 main indicators we are watching have not aborted their missions. The market is fine for now from this perspective.