The previous public post gave reasons for caution on silver. This update gives a reason for caution (and profit taking where desired) on silver, miners and the reflation trades in general.
The Silver/Gold ratio is on this very morning doing the thing I’d expected it might do weeks or even months from now. But that’s how silver rolls. It took out immediate resistance in the blink of an eye and as we had speculated might happen, it has now slammed directly into the lateral resistance zone up above.
This target was established for a reason and that reason was to stake out an area for profit taking. As such, I intend to take some today. I am not telling others what to do (there are still people known as investors out there) but for me not to be taking at least some profits in the precious metals and the wider reflation trades would seem greedy.
This is of course a reaction to the US dollar doing this. It is now very bearish and yet another lower low could seal its fate to a longer-term downtrend. So let’s not lose sight of the fact that the boom in silver and the reflationary macro are due to the desire of US political and monetary leaders to weaken the dollar. Their efforts may well succeed, but these clowns did not suddenly become market manipulating geniuses over night. There will be volatility on the way to the new Banana Republic.