alice

NFTRH; Precious Metals S/T Technical & Fundamental Update (med. priority)

Technical

HUI is indeed filling the gap as we speculated might be the case in the last update. Recall in that update we had noted HUI creeping above the SMA 50. Of course the market being the market, it promptly got dropped back below it. But the bounce scenario continues to allow for a test of the 190 area.

hui

One reason we kept the bounce alive was because HUI/Gold ratio remained intact to that scenario despite the bearish nominal price activity. Here is the HGR looking even better than it did in that update.

And Silver/Gold got repelled hard yesterday, but kept its constructive status.

So the bounce lives. But what of the sector and macro fundamentals? Here is a quick roundup.

Fundamentals

  • Macro Funda: The stock market’s weakness is beneficial in the short-term because it is driving down the SPX/Gold ratio. The ratio remains in its big picture uptrend, but for the short-term at least this is a positive for the gold sector as it bounces. The ratios of Industrial Metals and Palladium to Gold are also getting cracked today.
  • Sector Funda: The USO (oil)/Gold ratio is down 2% today and could be making a short-term top as well. Materials sectors are also taking a hit. In other words, mining costs are dropping in the short-term vs. mining product.

The fundamentals are not changing trends at this time, but we are managing a sector bounce and if something more negative engages on the macro we’d eventually be managing more than just a bounce. But I just wanted to get this still constructive snapshot in front of you for consideration.