Very strange indeed. One is smashing resistance and flashing ‘reflation on’ (among other potential things) and the other is saying err, no.
When I first started managing the Silver/Gold ratio intensely for you it was way down at the lower green shaded support zone. Never did I think it was going to unleash with the fury it has. The dashed horizontal green line was my ‘best case’.
So we can fret all we want about the blow off in silver, but it’s a launch too and when it blows out it will likely provide the first buying opportunity of the new bull market. But Silver/Gold is also flashing positive for the precious metals and the greater macro. Just because I am nervous about vertical silver does not mean I am going to stop using the indicators. Silver/Gold says what it says, and it says bullish for many global assets, especially commodities and resources.
Yet how do we explain this? Copper/Gold continues to break down within an existing downtrend. Yet copper miners are strong. It’s a market with a lot of moving and illogical (to me, anyway) parts in play currently.
We are not the only ones who see the big divergence in the silver miners to silver and the more routine short-term divergence in gold miners to gold. People are worried about it. What do they say about bull markets? Subscriber Michael, a very experienced mining professional, emailed me an exchange he had with a colleague and his colleague’s opinion rhymed with mine in this morning’s bullet pointed update.
There are reasons for caution. They are obvious. But it’s a bull market now. Remember who said that? It was ‘Old Turkey’ from Reminiscences of a Stock Operator. Old Turkey just sat like a mother hen on his eggs because “it’s a bull market you know”. I am not advocating that because speaking personally I am not a buy and hold hen. I hold core, trim some profits and trade others. But you get my point. As I’ve been saying, let’s not over react to potentially negative readings until they break down (e.g. silver stocks vs. silver).
As to the Copper/Gold ratio, I not only don’t worry about that with respect to the gold stock sector. I like it, for all the counter-cyclical reasons I’ve harped on about for years.
So here’s an update providing more noise for your consideration.