NFTRH+; Bullet Pointed Thoughts on the Precious Metals [edits added]

The way I view the current situation, in bullet points.

  • The miners are fading the metals, and while this can be a concern I am at the moment coming down on side of it being more of a positive.
  • If I were to guess about the ending of the rally I’d say it’s going to come in a final up-surge in the miners, as the laggards play catch up and the garbage starts shooting off like bottle rockets.
  • Caveat: HUI registered the long-standing target yesterday (373.85 vs. 375) or at least came close enough for government work.
  • But it feels like the gold bug “community” is nervous about a gold and silver blow off, at least by its lack of relative enthusiasm toward the miners. When the “community” is doubting itself that is a good thing. When the “community” is confident and touting that is a bad thing. Usually.
  • The trend in the HUI/Gold ratio is still up. Today it is being corrected to around its daily EMA 20 within its 50 day and 200 say moving average uptrends.
  • Gold and silver are scary, having blown away our targets. As I type silver futures are at 28.35 (my best target was 26 for this rally) and gold is at 2071 (vs. the target of 1940).
  • Scary can be good (if you’re positioned) and it can be bad (if you’re not positioned but dying to be, and also if you’re positioned but don’t like blow off phases).
  • To again define a blow off phase, I believe we are in the process of ending something but I’m damned now (beyond our targets and into full frontal momentum mode) if I know where or when it will end. I’ll try to do some work on that in NFTRH 615.
  • Typically, the miners should be leading. They are not… on the very short-term. But again, the trends are positive and the more important leadership time frames are intact.
  • Silver stocks are under threat, trend-wise vs. silver. That could be an early concern as they test the 200 day moving average.

Bottom Line

My current view is that the thing is so bullish that the average gold bug, who’s waited years for this, cannot handle it psychologically. Hence, the lag in the miners right now. Yesterday’s big upside and then smash down in HUI, GDX, GDXJ, etc. may have been the signal for a reversal of the rally. But I don’t lean that way. I lean – and with our targets in the books, I am just one guy guessing like everyone else right now – toward more rally to come and that this is a sentiment adjustment.

The miners’ under performance of late seems orderly although for day traders GDX has broken the support noted in the 15 min. chart update, while GDXJ is sitting right at that support. Please remember those support levels are in-day windows for day traders and not indicative of the general rally’s health (it is still technically fully intact). If the larger trends in gold stocks vs. gold start to break we’ll raise the caution levels. As it is, the SIL/SLV ratio is a concern as it tests its major uptrend. If it breaks down, we would have a higher caution signal in place.