Precious Metals bounce; no sign of speculative froth

The silver stock ETF is trending down vs. the gold stock ETF

The bounce from a secondary low in gold stocks (HUI, GDX, GDXJ) has been going on since mid-December. Meanwhile the Silver Miners ETF (SIL) is well contained in relation to HUI. That means there is a little speculative froth in the sector and even better, little inflationary hype (as a wrong-headed reason to buy gold stocks). It appears inflationist bugs are either in hiding or off to other pastures like industrial metals, energy/uranium or other traditional secondary gold bug haunts.

As the SIL/GDX ratio shows, there is no conviction whatsoever among the balance of the Bug-o-Sphere, a majority of which are inflationist. At the least, it’s a green light for a continued sector bounce right in line with the seasonal average. Maybe later, if the ratio is ramping to the upside, a caution signal will develop. But for now, the miners are bouncing under cover of darkness.

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