USD is the anti-market, which has been hammering asset markets with its liquidity bid. The confirming indicator over the last several months as been the Gold/Silver ratio, which has established an uptrend.
For relief to come to the precious metals, and perhaps the wider ‘inflation trades’ and general markets, it would be best for gold to start to fail vs. silver (“metallic credit spread”), which would knock a supportive leg out from under USD, theoretically of course, but also probably.
Here is the Gold/Silver ratio dropping this morning to test its major daily chart uptrend marker (SMA 200). Uptrend is intact.
Let’s flip it over to the Silver/Gold view, that would need to go bullish to signal asset market relief. When the bounce was projected we planned that it had the potential to bounce to the downtrending SMA 200 and/or resistance as shown. A downtrend is still intact despite the bounce.
Bottom Line
Could this be it? THE start of the rally/bull? Sure. Is it necessarily? That is not indicated by the technicals. It could be the start of something longer-term bullish but as yet it’s just a bounce from deplorably bearish sentiment.
We can watch gold stocks (HUI), which halted right at the SMA 50 on Friday, as well. The first objective there is to take out the SMA 50 and hold above it.
