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I am trying to treat us like adults, not like a bunch of schleps rooting and cheering for the home team. The home team being Goldbugville and the metals within its borders.

As noted in the in-week notes on Tuesday, I have developed a view that a final bull leg (for this phase of the bull market) could coincide with a significant upward snap-back in the Silver/Gold ratio (the plan all along), that terminates at a logical point (the logical next step to the plan now that the SGR is making it move).

Here is the SGR this morning. The target is the red resistance line at the bottom of the consolidation cluster that formed from December through March. Possibly higher, to the downtrending SMA 200 (orange), which is declining toward that level. In an extreme, the upper resistance line (when silver moves, it moves).

In short, if we get to those levels and precious metals stocks are overbought, gold bugs are lecturing and silver bugs are pumping things like “$100/oz., train’s leaving the station!!”, it would likely coincide with a selling opportunity. Whether my view is right or wrong, it’s always good to tune down the pumpers and manage markets like an adult.

As to nominal silver’s targeting, a simple measurement of the consolidation box would target the 40 area on the daily chart.

The weekly chart shows the basis for our previous target of 35, which has been registered. That was the measurement of the Inverted H&S from its down-sloping neckline. However, we later added another line (green dotted) horizontally across, which would target the 41 area. In other words, in agreement with the daily chart consolidation pattern breakout above.

Bottom Line

While of course subject to change since I am not a Swami with a crystal ball, I am looking for a hard snap-back in the Silver/Gold ratio to near the downtrending 200 day moving average, with nominal silver targeting the 40 area.

At such time the precious metals should be well overbought and the beautiful noise coming out of the gold bug community’s many orifices should advise a sell signal and complete profit play. This would probably also start to break the commodity trades that are tagging along and would likely come around the time of a real high in broad stock markets.

Looking out many months, after the Fed weakens and after the precious metals have punished the FOMOs with a solid correction, we may actually get the longer-term bull in the would-be unique gold mining space.

Obviously a lot of moving parts, some of which I will probably not be accurate about. But it’s my plan and I want to lay it out to you for consideration and/or critique.