A subscriber asks for my thoughts on the silver/gold ratio, so why not expand the update to include gold and HUI as well?
The subscriber also asked about my thoughts on Sprott (SII) and I’ll simply note that it has broken out of a 6 year long base and is bullish with a targeted objective for 42 to 43 (current price 38.70).
As for Silver/SPX, it is in a grinding and volatile potential bottoming stance on the daily view with the SMA 50 and SMA 200 neutral but slightly biased up. RSI and MACD are positive.
The weekly chart also has positive RSI and MACD. That’s interesting. But as yet it’s not conclusive toward anything other than its potential to bottom. It would be confirmed if the ratio were to take out the two most recent highs, which would be something similar to what Sprott (SII) did.
The monthly chart really puts the picture into perspective. RSI and MACD have been steadily working their way upward but are still negative. Since 2017 the ratio has been bobbing along above long-term support and below long-term resistance. The silver bubble blew out in 2011 and this is the work needed to punish and fix that. A risk vs. reward player would favor silver right now and not worry about timing, and that would be important because it could be a long time before the ratio does anything actionable.
While on the theme (relative to SPX), let’s expand to the Gold/SPX monthly view and note how the leader has held long-term support and turned RSI up in a nice stair-step using its EMA 20 as support. MACD has also gone positive. This to me looks like a nice and prospective chart but gold bugs will not take center stage until/unless the resistance area at the recent panic highs is taken out. It’s logical that the ratio has pulled back during the stock market relief rally. Much comes down again to whether you believe in stocks or not. If not, the gold sector should become preeminent. If so, you do not want to be a raving gold bug. Maybe just a quieter one (if there is such a thing). :-)
Finally, a look at monthly HUI/SPX. RSI is positive. MACD has recently ticked positive. Clear support has been held and the best part is that per NFTRH 610, the HUI/Gold ratio is in fine working order as well. This chart tells me that the risk vs. reward for gold stocks vs. broad stocks is good. We’ll deal with resistance when needed, but for now I’d buy HUI vs. SPX.
