alice

NFTRH; About the Precious Metals Consolidation (high priority)

The recent modest pullbacks in gold and silver look normal to an ongoing intermediate uptrend at this point. Gold is flagging down (about $11/oz so far) and probably wants to fill the gap at least. More S/T support as at the consolidation shelf in the 1290s.

gold

Silver also looks normal and is probing S/T support now.

silver

The Silver/Gold ratio, while still firmly in its major downtrend, has not broken down from the shorter-term uptrend (although its failure to make a higher high was/is a caution).

silver/gold ratio

But here is the interesting piece of news. The HUI/Gold ratio has held firm so far in its attempt to take out the SMA 200. In other words, so far anyway it is having none of precious metals pullback scenario.

hui/gold ratio

Today and the rest of this week appears to be key in determining if this is going to be the same old, same old (i.e. the sector takes a hard hit after a hearty bounce) or something new and different.

If HUI/Gold takes out the SMA 200 it would be a very notable situation regardless of whether nominal metals and miners remain under pressure. It would be a sort of hidden divergence beneath the surface.

Here is how nominal HUI finished yesterday, having been under pressure with gold stock buying coming in late in the day.

hui

The 30 min. chart shows that recovery. Of note, when looking at 30 min. charts of GDX and GDXJ, the upside came on a burst of volume.

Bottom Line

As gold and silver pull back, the miners are not yet doing so. This after gapping up in an impulsive break above the daily SMA 200 (HUI). This is obviously a short-term sign of strength and conviction. It may just be over excited gold bugs due to get clobbered any moment now. But the tenor is different from usual, with usual being that the miners weaken and lead gold on the pullbacks.

With the stock market stretching the upside limits (of what is just a bounce or something more long-term bullish) I think this divergence in the counter-cyclical miners is interesting. Let’s see how the week closes. If the miners pull back and lead gold down, so be it, same shit different day. But if this divergence continues we would be talking about a bullish signal in NFTRH 538 this weekend.