Back before the Silver/Gold ratio made its break upward (several weekly reports ago) we discussed how such a move could positively impact the CRB index. Now that the play is in motion, I’d like to review.
The current situation for the CRB index was compared to its situation a couple decades ago, when gold led the initial launch in commodities in 2002, CRB took a correction in 2006-2007, and took one final spike upward before the crash of 2008 liquidated most markets.
While this could be a real rotation to the elusive “commodity super cycle” that the touts I mean pro-commodity analysts perma-anticipate, to play it safe I am going with a preferred view that if the current consolidation breaks to the upside it could come within a final act before markets potentially take a liquidation, as they did in 2008.
A measured target from the weekly chart pattern is 385.
Meanwhile, the monthly chart (as reviewed several weeks ago in NFTRH) is constructive, at worst. RSI is coiling and MACD is sneaky okay. Wouldn’t it be nice if we could get a big commodity trade going, complete with the usual suspects touting “hard assets”? It would be tradable to the upside. Quite profitable. But for safety sake, I’d want to consider it terminal until/unless it proves otherwise.
This would probably involve the Silver/Gold ratio (SGR) moving higher than currently expected, however. The monthly chart above would probably not do too much if silver’s rise vs. gold is contained below the upper resistance zone on this daily chart.
Indeed, for the CRB to do what it looks like it wants to do, the SGR would probably have to continue upward and do some real upside damage, busting through long-term resistance. It could happen. I don’t want to be too dogmatic about my original view of a rally in the SGR that will fail at a certain level. I want to have an open mind to go with that favored view.
A halt by the SGR at/below resistance is the favored view. But the CRB index looks constructive in its own right. It’s a fast moving market with a lot of geopolitical and supply/demand noise informing it. I don’t want to sell out of the commodity trades until I get a better idea of whether or not CRB is going to break out and go for its measured target.
