NFTRH; Precious metals views beneath the surface

A few pictures and impressions, pre-CPI.

It is possible that the HUI/SPX ratio double bottomed in early November. Of course, that could also have been said in April with a triple bottom that went on to fail. My personal view is that the broad stock market is over-valued, structurally over-bullish sentiment-wise and thus high risk, almost by definition.

It will not take much to jerk the precious metals bullish in relation if/when the stock market starts to flounder. As yet, nominal stock markets remain firmly trending up even as they start the week correcting some of the recent excesses.

Gold/SPX has bounced a bit but remains firmly locked in a downtrend.

HUI/Gold shows a more constructive situation. If the miners continue to lead gold and the stock market then a logical assumption would be that Gold/SPX would eventually follow (Captain Obvious). If this chart were a stock it would be a buy (as a bottom feed, IMO). It’s a ratio however, and the important point is for it to stay above the 50 day average and eventually turn it upward.

Silver/Gold is also perched in a pattern that I would want to buy if it were a stock.

Finally, from the bond market comes some signaling that would appear to be beneficial for the precious metals complex if it continues. As we have noted previously, while I am no raving inflationist gold bug (far from it), there are times when gold benefits from inflation. A time when silver is leading and Treasury yields are dropping (bonds rallying) would be one of those times.

Now, with the understanding that CPI and whatever inflation headlines come from it is due out in 20 minutes (from this writing), if silver continues leading, and inflation expectations and bonds continue doing as below it would be beneficial to the precious metals. If they reverse, the situation could get more problematic. It is probably not a coincidence that bonds and gold stocks (and gold stock ratios) are in similar patterns.