In NFTRH 862 we introduced the possibility of a big upside trade in commodities and resources. But I want to emphasize again that that would be pending silver finally wrestling leadership from gold. It has obviously not done that yet. I don’t recall how strongly I made the point that this is speculative at this time. So I want to update here to be sure.
Also, for silver to start leading gold, the US dollar would very likely have to fail this little bottoming potential, which it has not done. Indeed, I held my Euro shorts because I still think this low in USD can spur a rally. It was nice to write about the TSX-V’s potential and to view the interesting and bull-biased consolidation in the CRB index. But Uncle Buck will probably need to play along by failing. This does not have the look of failing in the short-term. Below 100, we can talk failing USD.
If a Silver/Gold ratio instigated Commodity play does happen, it might need to wait until after USD gets a counter-trend rally going. I am going to hold my Euro and gold shorts and depending on what happens this week, consider increasing them (or offing them if USD fails).
The general view on gold stocks remains bullish (for a potentially strong up-move that ends this phase of the bull at or above HUI 500), as they have risen with the Gold/Silver ratio and the rally could take on a different – and less fundamentally sound character – if silver leads. But you know how it goes when silver bugs are out front. It can get wild. Just the kind of stuff that could propel a final leg.
