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[edit] The update was posted before being proofed. I am going back and cleaning it up a bit, so please do review it again after 10:30 U.S. Eastern time.

Hammer and I had a little back and forth about the 2 Horsemen (of the macro Apocalypse), which is my imagery for the liquidity destruction that would be inflicted upon the broad markets, likely including precious metals if gold and silver decline nominally with silver declining harder (Horseman #1).

The other Horseman is of course the US dollar, which has had no quarter given this whole year as the economy eases and Trump demands – probably rightfully, given what I think is ahead – rate cuts. Rate cuts are non-supportive of the currency.

As noted each time we discuss this, there is one trick left up Uncle Buck’s sleeve, and that is the liquidity bid. In that event, players are literally forced into US dollar as they flee the anti-USD asset market trades. Along with that gold, with its counter-cyclical, less inflationary utility (to silver), would see the Gold/Silver ratio (GSR) rise in tandem with the US dollar. Voila! The…

While still on the Silver/Gold ratio trades (“SGR trades”), we note and should take seriously every point of question. A couple days ago SGR looked like it was about to bust upward to a new high. This morning in pre-market, it gives the appearance of a potential double top. And I do not like the look of RSI at all. If this were to go bearish, Captain Obvious wants us to know that the GSR (Horseman #1) would go bullish.

Now we watch for a potential and improbable bottom/upturn in Horseman #2. USD held support at 97.50. There is more basis for that support at the January 2022 high, not shown on this daily chart.

Bottom Line

I am ready to sell every last “bull stock” * and cash up and increase short-term Treasury bond exposure. I just don’t think there is much more juice in that pig prior to expected turbulence in Q4.

I am less ready to sell gold stocks, because they comprise a sector that is in my opinion putting on a real bull market after a bear market that began in 2012 and technically did not end until 2016, but functionally did not end until the 2022 low. A decade of pain for gold stock bulls; both of them. :-)

But if the broads are going to be addressed by the 2 Horsemen, so too would the miners, assuming gold and silver would be declining.

However… it gets more complicated. The HUI/Gold ratio is rising impulsively now. That could be a sign of ending stages. As could the frothy Miners Bullish Percent Index. But these are both indicating what happens in a real bull market.

The other issue is that gold looks technically bullish, in its daily chart triangle and looks ready to bottom and turn up in its ratio to the S&P 500.

So the time for a correction might not be here just yet, with HUI conveniently at a clear resistance/target point with a potential to make a third consecutive August high. How often do markets play out to such exactness? Not often, even if those are my own data points and not necessarily what other casino patrons a looking at.

I am going to prioritize my best gold stocks, but take profits elsewhere. The question is timing. I think it’s coming soon, as the plan all along has been late Q3 or Q4.

I cannot plan a one size fits all strategy, but I’d see it this way regarding gold stocks:

Traders

You set a target of 500, the target has been registered. You take your profits and don’t look back at what you might leave on the table. There likely would be $ left on the table, is how it usually works.

Investors

You may choose to take some profits and wait for lower buying opportunity that may or may not come in a convenient time frame. Or you may just hold for a future leg up in the bull market after increasing positioning on pullbacks and corrections. Old Turkey style (Reminiscences Of A Stock Operator).

Hybrid (me)

You will hedge and try like to hold your best stocks. You will try to take some profits too. You (Gary), will also try to short strategically (Euro, certain stocks/sectors) to indirectly buffer any damage to remaining gold stocks. In addition to selectively shorting the stock market, I’d consider buying volatility as well.

All of us

To gain a view to what is ahead, and in this case I mean a potential interruption in the gold stock bull market, we want keep an eye on, in order of priority…

1. The 2 Horseman, GSR & USD, assuming gold and silver decline with gold declining much less. A rising GSR & USD would be a macro warning.
2. Of course, the flip side is the Silver/Gold ratio and the TSX-V/TSX ratio. Thing one is a bit questionable now and at yesterday’s close Thing 2 was reestablishing its firm intermediate uptrend.
3. The HUI/Gold ratio, which is bulling now but at such time as it may take one of those violent hits we could have an internal signal.
4. Sentiment and momentum. Anecdotally, bravado is in play now in the buggish community. BPGDM is and has been frothy (and bullish).

Of course, added to the concepts above is the technical picture. HUI is bullish and at clear resistance. Gold is lurking bullish in symmetrical triangle. And silver is sloppily trending up. Until those situations change, the functional bull trends don’t change.

I think we are in the final weeks of the broad 2025 asset market run. I’ve tried to describe what to look for in the precious metals. But the best indication of all could simply be a stock market rolling over bearish.

A final consideration is that I have found over the years that when I see something, say something about it and eventually turn out to be right, the actual THING often takes materially longer to actually occur. So I am not trying to raise alarm bells here. I just want to keep us tuned up and also invite alternate views.

* Bull stock is my term for the broader market equity areas that are more popular with conventional players.