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Hammer and I talked about NFTRH++ and mutually decided that it should simply be a new aspect of NFTRH, not a higher for-pay tier of service. In other words, it’s here, it’s developing * at its own pace, and it will be an option for any subscriber to check out, should they wish.

This allows me to stick to what I do best with the top-down macro stuff (with a little trading discussion as usual, if/when I see something interesting), and allows Hammer to simply be Hammer, grow or limit his role as he sees fit, and not try to push ++ to be something other than what it will be. You see? It should be fun.

* It’s development path may include live discussion and 2-way information flow along with charting. But I am going to leave it to Hammer to see what he comes up with.

“Inflation Trade” Beginning?

Last week we saw the US dollar weaken after a US debt downgrade and under the constant pressure of the Trump admin, doing all it can to weaken the currency. Especially its loud calls for the Fed to cut interest rates, which is another way of screaming to the market “DEVALUE THE DOLLAR!”

America will try to be great again… in appearances. It’s the oldest trick in the book, leveraging currency for appearances of economic strength and for asset market gains. Except that until 2025 the US held the world’s reserve currency, gladly or grudgingly accepted as such, the world over. Things are changing.

The US dollar has one ally left, in my opinion. That remains the prospect of bubble liquidation in asset markets. That would force a large chunk of the investing world into US dollars, at least temporarily. But we are gauging the potential for an upside inflation trade first.

Thus far, I have been wrong about such a trade following a signal in the Silver/Gold ratio because the SGR is still languishing. But the favored view is and has been that when this plunge bottoms (either here or lower) it would then surge as per other occasions when silver has been deeply depressed vs. gold.

That would be a trigger to a wider trade in commodities, resources and markets that are generally anti-USD and/or inflation sensitive.

But some items have started to launch already. They include what we often note to be “specialty” items, like Uranium and PGMs, while other specialties like Rare Earths have taken a breather. Copper is and has been constructive and now the miners bear watching.

I hold CCJ and NXE in the uranium patch, bought back MP and LYSDY (despite their corrective states) in REE, and have added copper exposure via FCX, SCCO, ARREF (ARG.TO) and COPX.

So as you can see, I am slithering toward a commodities/resources inflation trade, despite the still dormant Silver/Gold ratio.

However, the TSX-V (daily) has been a good guide as its universe of speculative holdings is very commodity/resource intensive.

As has its ratio to the senior TSX index (daily), showing an uptrend from US election day, almost in confirmation of a coming “weak dollar” presidency.

This ratio has been in alignment with the CRB index much more often than not over the last 25 years. The main exception being the post-pandemic era. Has CRB been dwelling in consolidation waiting for Wayne and Garth to show up to the party, or is the ratio waiting for CRB to fall? As long as the short-term chart above continues to trend upward, we can remain open to the idea that a serious trade in commodities could yet be in the offing.

With that said, the still depressed Silver/Gold ratio is illogical to that prospect. So let’s have some level of temperance until it wakes up.

The Copper Miners ETF (daily) has not turned its trend yet. But it’s worth a shot, given the prospects of a possible commodity trade.

After adding SPPP for Palladium and Platinum exposure, I added PALL (daily) as well because it is pulling back to test its base breakout at clear support coinciding with the 200 day average.

Here is the monthly chart of SPPP, showing a year-long hold of support. I like the look of RSI and MACD is triggered up.

SBSW is the primary watch list stock for Pt and Pd. Also, side orders of gold and lithium. I did not chase SBSW, but would strongly consider it – pending wider commodity view – if it were to test the 5.20 area. That may not happen, however, if these moves are the real deal and launches into a bullish commodity view. Initial support is around 5.80.

URNM is still trending down, but what a move the Uranium sector had last week. I had previously bottom fed CCJ and NXE and have no imminent plan to unload them until I get a read on the sector and the commodity trades in general. CCJ is reestablishing its long-term uptrend and NXE is rallying within a downtrend, much like URNM.

I want to take a look at long time Nickel holding TLOFF (TLO.TO), Talon Metals. I endured the floundering here for months to the tune of up to a 36% paper loss. Today, that has all changed with recent drilling news. From MC, a subscriber and geologist who advised us well in Great Bear Resources (since bought out by Kinross) a few years ago, and also suggested AE.V (still very speculative) more recently:

…they will have steady drilling news-flow for months as they continue to follow the new very high grade zone along strike. They are currently wedging off the last hole so new results will come fairly quickly.

In the new high-grade zone, only 500 metres of conduit strike length = ~1,000,000 tonnes of contained Ni equiv. at 20% Ni equiv grades. This could be a really special discovery.”

After years of taking a beating after its initial enthusiasm back in 2020-2021 the company has some warts for sure as it has remained in survival mode due to the terrible bear market in small resource stocks. But while I have not directly quoted MC on his view of the potential upside, let’s just say he is quite optimistic. A starting point for your own further research if you have interest.

It has tripled off of its general lows of H2, 2024 and Q1, 2025 but the monthly chart shows how far and for how long it fell. It is at these levels with excellent drilling news that was not in play in 2021. Let’s also recall the 2022 Tesla off-take agreement as well, and consider that the political environment is quite friendly now for a US based project.

I want to be careful about being perceived as touting a stock after it has tripled. I bottom fed it, endured many months of paper losses and now it’s moving, and moving for a reason. It’s still speculative and when I say it should be subject to individual research, I mean it. I am just relaying my info now that there is something to talk about.

Now, if the Nickel price were to ever get off the floor…

Bottom Line

We have been creeping a potential commodity/resources/”inflation” trade. While the Silver/Gold ratio is still holding out, we are on watch for a change.

Meanwhile, certain items are popping hard and it feels like more than a garden variety “pop and drop” Whack-a-Mole style commodity rotation. As long as the TSX-V index leads the TSX I want to keep an eye on the Silver/Gold ratio as a potential confirmation of a larger trade in play.

For now, you know me. Patience, temperance and even keel (sort of).

US Stock Market

Last week with regard to SPX we noted that the technicals resolved in favor of the bulls and an A-B-C bull market correction scenario completing. However, also…

As for the very short-term, SPX has left some gaps and it would be reasonable to think that it could drop for a test of the SMA 200 and gap fill in the 5690 area.

SPX turned down and ended the week at the support of the ‘B’ high and the SMA 200. That could hold, or the gap could fill at 5690. Or the SMA 50 could get tested with a gap fill down at 5581. It’s all on the table, but the situation is tentatively leaning bullish at this time. That said, my main interests are elsewhere (precious metals and commodities).

US Market Sentiment

The sentiment picture allows for further short-term market pullback as Smart money has faded hard and Dumb has eaten stocks with much FOMO-driven hunger.

Fear/Greed index ended the week on the same message.

NAAIM (investment managers’ sentiment) as well, as of May 21st.

Bottom Line

The situation is asking for further market pullback in the short-term, from a sentiment perspective. Alternatively, if the pullback is arrested around current levels and new upside generates, an unhealthy contrarian sentiment backdrop will become more so.

Precious Metals

Please reference May 20 NFTRH+ update on gold stocks and May 23 NFTRH+ update on the whole PM complex. Friday’s update, especially, brings us up to speed. Gold stocks have broken a bull flag to the upside and are on the verge of confirming a next leg up in the bull. Gold is still in its bull flag downtrend channel and silver is above its daily SMA 50 and lurking, waiting to possibly take over leadership.

Let’s look at a few internals (HUI/Gold ratio was updated in the May 23 update) and indications, starting with BPGDM, which came off of frothy levels and corrected, but only in routine fashion. But it’s a bull market trend, so BPGDM does not need to get extreme to the downside before a correction ends. Let’s just say that it’s done decent work and gold stocks are far from frothy now.

Gold ratios (daily) show the situation in Gold/Silver, which has been macro-fundamentally positive for gold mining in its strength, but could be positive if it declines from a market psych perspective (inflationist gold and silver bugs).

Gold/Copper and Gold/Oil are still trending up but in consolidation. As per the 2004-2008 period, gold mining rose in a bubble against its own best fundamentals. These ratios have not broken down, so that is not the case currently. But the point is that the PM complex certainly can rise even if commodities do gain a relative bid (and silver leads gold).

Gold vs. stock markets has done good corrective work, giving mainstream investors some measure of hope that things can go back to (new) normal. Regardless of where the rally in stocks ends, I think it’s a last chance power drive. Gold is fine, and it needed a cool-down.

The last pane above shows Gold/RINF, and that is not an inflationary picture. And by the way, we don’t need an overtly inflationary macro for the “inflation trades” we’ve been discussing to play out. Indeed, it could come with relief from inflation anxiety, because that = a perceived weaker Fed.

Here is the HUI index, still in line with its Gold/RINF internal underpinning. This is still fundamentally true to the view that inflation is NOT a good macro input for gold mining (he shouts endlessly to gold bug ears that just don’t seem to care).

Revisiting the Gold/Silver ratio, if the macro remains disinflationary, the miners are doing the right thing in rising with the GSR, per the 2001-2004 analog. The cool thing is that if the GSR drops and silver breaks bullish, the miners will very likely also rise. But it is so important on the bigger picture to remain aware of…

Scenario 1 (rising GSR): Increasingly positive gold mining fundamentals along with the real price of gold. But also threats of deep corrections if/when broader markets liquidate, or…

Scenario 2 (declining GSR): Degrading gold mining fundamentals along with declining real price of gold. A situation which could see big stock price gains and a potential bubble top (e.g. 2008’s H&S “crown of thorns”).

At this time we are still on scenario 1.

And I prefer scenario 1 for a variety of reasons, but I’ll work with either. And both have the potential to bring in more near-term gains for the sector. It’ll just be handy for us one day to be understanding what’s really going on beneath the surface of price activity, rather than just staring at charts and plotting bullish.

In 2004-2008 awareness (but not overreaction) allowed me to ride the bull with caution. In 2010 I got caught staring at HUI’s chart breakout, projecting a target of 888. Err… wrong, G. We must keep track of what is actually going on internally and factor it, manage it, but not overreact to it. There’s munny to be made, after all.

Let’s wrap ‘er up with a chart that further explains why declining inflation and declining economic activity, implying a dovish Fed, would be beneficial fundamentally, to gold stocks.

Bottom Line

Bullish, baby. For the miners, unless last week’s move to break the bull flag was some kind of epic head fake (or unless some particular jawbone opens up in the media). We are currently targeting HUI 500.

Gold is due to shift to under-performance vs. silver. Nominal silver is nesting above its important moving average trends and appears poised. Yet it has not moved out of the nest. If it does so, it would be technically positive for the PM complex, but also a wider swath of the markets, especially commodities.

Big picture, we are in a new macro and gold is in a big time bull market, yet has not even done much relative to the cyclical asset world that benefited from inflationary policies by Fed and government since 2001.

Global Stock Markets

ACWX is still in bull mode as the world rotates from the US. The red highlighted point is the lower low that I think may be a scout for a future global bear market.

However, ACWX/SPY continues to say “if we are going to go bearish, the US is going to go more bearish” or alternatively, “we will be more bullish”. I believe a bear market is out there, but for now the series of higher highs/lows in this ratio implies an intact recovery in global vs. US.

US Dollar

The linchpin to the above is the US dollar, which we have shown historically to be inversely correlated to global market performance vs. the US market. In other words, a weak dollar benefits global markets on balance in relation to US markets.

USD (daily) failed at a logical place, testing the combo of visual resistance and the SMA 50. Notice how that bounce reset RSI from deeply oversold. That is how bear markets work (as do bulls, in reverse). There is downside fuel in RSI now. But USD is sitting on support (not visible on this daily chart). Not a pleasant picture.

The big picture view shows an intact bull market from 2008. This should be kept tabs on because when the fun and games end, and if the world has not yet successfully pivoted into alternatives (including BRICS/Gold-backed currency initiatives) then Uncle Buck could get pretty pissed at the time of the next broad market liquidation. Above 90 the DXY bull market is still in play. I just report the reality of what I see.

Portfolio

Gold is long-term risk management & monetary value/stability in a balanced portfolio.

Taxable Account

In order of position size. Cash/equiv is high. But the portfolio wants to get more in the game if the commodity trades start to fan out to more areas. As it stands, I’ve held a few bull stocks, held and increased favored gold stocks, held CCJ in uranium, and have started pecking away at copper and palladium.

Trading Account

No positions. This is where I’d like to nimbly short individual equities when I start to feel the broad rally is concluding. If the Silver/Gold ratio plays out to the upside, I may trade long in commodity related equities.

Roth IRA (non-taxable, no contributions)

The chart is doing the right thing. I am pleased to see it at new highs while stocks, precious metals, etc. are not at new highs. But I will need to become a bit less conservative if things break the way of the Silver/Gold ratio and a larger “inflation trade”.

Cash and equivalents are at 79%. Bull stocks still held, commodity/resource stocks held and being added slowly. Same goes for silver and PGM bullion funds. I am ready for the party to start, but am not going to jump the party, because I am a cautious sort by nature. In short, I am happy where things stand at this moment and am ready for more bull. Give me a silver bull move and I’ll press the broader bull case in the commodities/resources spectrum.

Cash & income-generating Equivalents are at levels that are right for me and my real-world situation. Your situation is different. Cash will be adjusted as needed.

Refer to the Trade Log under the NFTRH Premium menu at nftrh.com for trade info, if interested (not that you necessarily should be). Also, you can follow on X @NFTRHgt for notice of updates.

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Notes From the Rabbit Hole (NFTRH) is a weekly market report in which we provide analysis on financial markets.  We make every effort to provide accurate and high quality content, but this analysis ultimately represents our opinions and these opinions are provided without warranty or guarantee of any kind.  See full terms & conditions of service under the ‘About’ heading in the main menu.