Blog

Tactical

As per the Weekly Notes, I decided to cash in some chips on Friday. I already have remorse about a couple sales, and that is what greed will do to you. Why be thankful for booked profits when you can agonize about what might have been had you just kept it all on the table, eh? I just saw some items (including some regular “bull stocks”) up much higher than originally expected, and said “gimme my munny”.

No gold stocks were sold, as I’ve got them reasonably insured through put options. Although that GDXJ put is not something that seems to play as well as the GDX put. If I add more insurance, it’ll probably be of the GDX variety. I did take profits on silver stocks, including AbraSilver, which exploded upward after it was bought. Gold bug? Yes. Silver bug? Not so much. Not quite yet.

I generally want to be fading the greater pig, I mean stock market. Trends are up, blah blah blah. VIX and junk bond spreads are on the floor, inactivated, blah blah blah… it’s all bullish out there. Blah blah blah. I don’t care. As I went to the links page a moment ago to check the High Yield (junk) Spread, I saw the link to John Hussman’s site and decided to see what the good doctor had to say. This, among other things:

Division by zero is known as a ‘singularity.’ It’s the point where equations break down, values become ‘indeterminate,’ things stop working normally, and variables shoot toward infinity and suddenly collapse on the other side. The current speculative bubble was driven by a singularity. Avoiding the crash on the other side relies on the willingness of investors to accept the lowest long-term return prospects in U.S. history, forever. Extremely high prices may seem like a beautiful thing, but they’re a corrupt bargain. Unless you actually sell, the cost of “enjoying” record high valuations is that you are locking-in record low future rates of return.

Of course, Doc Hussman is reliable in his beautifully written anti-bubble-ism year after year. He’s always wrong. Until he is right.

When we are in the midst of a bubble and making “coin” because we are smart (we may think), we do not see the pain that would ensue when the gambit finally runs out of steam. What I am trying to do now is see that pain ahead of time and thank the market godz for what they’ve provided to this point.

It’s as simple as that, and with my consciousness-altering medical issues this year I’d also like to think I’ve had a bit of mind altering going on as well. Among other aspects like having less tolerance for assholes, but more respect for more people (I have, after all, at times been an asshole too) and a willingness to say exactly what I think more often, I am learning to appreciate what I have.

So, applied to the markets, thank you. 2025 has been a good year. I have 1 week down and 7 to go with treatments and so far it’s a breeze. But I don’t want faulty market management due to greed messing with me as we move through Q4. Simple.

Precious Metals

On Friday I exposed my most fundamental views about gold. It’s in essence what I’ve been writing about since 2004, but I tried to pack it all in to an article that marries that view to the current state of a completely messed up society.

Why Gold is “Value” in Today’s Economy

That is the big picture. Let’s dial in the small picture. Gold is overbought on the daily chart.

The medium picture shows gold overbought as well.

The big picture? Yup, overbought. Massively so.

We just have to deal with it. Gold is overbought. That overbought reading is and has been another way of saying bullish. As have the consistently high risk readings at Sentimentrader, for one example.

Silver is also overbought on the daily, weekly and monthly charts. It’s bullish. Here is the weekly chart showing the most overbought reading, aside from the big 2011 show stopper, since the previous bull market began over 2 decades ago.

Silver also happens to be testing the 50 area highs of 2011 and the legendary Hunt Brothers’ high of 1980. We are and have been targeting new all-time highs (and it’s about time).

Here I’ll just warn that everybody knows all of this now. I am someone who actually wrote (linked article at beginning of segment) that $10,000 gold may be a conservative long-term target). But historically, during any given phase when silver bugs start hooting and hollering about its cheapness relative to gold (note upper right corner of my home made meme below) and pull out the old targets of 100, 200 and beyond, it has been time to have caution.

As to the guy in the upper left? The dreaded “failure to deliver” would probably prompt mass raids of Grandma’s silverware, melted down to satisfy physical demand to paper claims. I am joking, of course. But still, it’s silver, it’s abundant and fundamentally positive or not (I think it is), when the clown car fills up and hits the road, caution has traditionally been a good idea. To a lesser degree, that goes for gold too.

That said, silver will have a unique position fundamentally if society does not completely fall apart and we continue on a path toward more innovative technologies in clean energy, medical devices, semiconductors and water purification, among other things. That combined with its utility as the “poor man’s precious metal” is quite a mix.

As an indicator, silver will help us determine what is next on the macro, a resumed inflationary phase or a an interim deflationary (scare) one. This of course, is the basis of the Silver/Gold ratio, measuring a more industrially cyclical and inflation sensitive metal vs. it daddy, a more counter-cyclical, less inflation sensitive metal. Silver’s less “moneyness” vs. gold’s more “moneyness”.

Logically today, the SGR is rising along with the party going on all around the macro markets. U.S., global, everywhere. That’s what silver does vs. gold, it brings out these guys…

The daily chart shows the party in play since the spring. Woo hoo! Bullish, baby!!

The weekly chart calms calms us down with a dour “not so fast”.

I am all for going heavily bullish silver and the commodity/resources macro if the ratio takes out the 2024 high and changes the long-term trend to up.

But such a move would challenge history, as history has not been on silver’s side relative to gold since an upside blowoff in the 1960s. With the exception of the ill-fated ending (Hunt Bros) spike in 1980 and the similarly ill-fated ending spike in 2011, silver has consistently failed to gain traction vs. gold.

But let’s take it further. Here is the SGR with the Continuum (our 30yr yield indicator). If the Continuum’s big picture message is of an inflationary macro ahead, and if we are correct in the view that it’s indeed a “new macro”, might Treasury bond yields eventually lead silver higher vs. gold? Yes, they might.

So for now I’ll poke some fun at silver bugs and continue to use them as sentiment indicators in the short-term, but there is potential in the years ahead for silver to blow you (us) away with its upside.

Moving on to the gold miners, I have already sold some of the big names: KGC, AGI, RGLD, WPM, AEM (partial), etc. But I have funneled that cash back into initiating or increasing positions in smaller names (BTG, EQX, KNT.TO, RIO.TO, AYA.TO, DC, WRLG.V, TFPM, ELEMD) while hanging on to NGD and adding back old friends MAI.V and SKE.

From here until the correction arrives (tomorrow or next year, I have no clue) I’ll try to only add situations that don’t necessarily go with the sector. For example, the recent buys in AYA.TO, after a short seller worked the stock over into a decline. Or WRLG, which pulled back to what looks like a buy (where I should have but failed to add a second position at the uptrending 50 day average).

This one has a chart I like, a decent story (that I need to do more reading up on) and a good locale. But that was a lot of red volume selling the stock down recently. So it may bear further review. But all things being equal, that’s a chart to be bought. A sharp pullback within a bull market. It’s a technical example, not a reco as I don’t know enough fundamentally to make a clear statement that I am going to hold it indefinitely.

HUI keeps making me move my point ‘5’ higher. As noted previously, this index probably wants to join GDM/GDX at new all-time highs. Massively overbought, hysterically bullish. It is what it is.

Now let’s look at some more indications. Above we discussed the Silver/Gold ratio. Let’s go through much of the rest of the indicator pack.

Where previously HUI was positively correlated with the Gold/Silver ratio (green), which is fundamentally righteous, if not always profitable, price-wise, now Huey is doing what has been the usual, rising with a declining Gold/Silver ratio (blue). If you look at the chart you see there have been long phases of positive correlation with silver leadership (to the upside in 2004-2008, as a bubble formed amid eroding fundamentals and the downside in 2008 and 2012-2016).

The message here is that should silver not continue to outperform gold the gold stock sector would be vulnerable to correction because do you think the investor base is pure? I don’t either. It is filled with silver bulls, leading the charge of the speculators.

A currently bullish indicator is the downward path of the Fed Funds rate, which normally coincides with bullish gold stocks. Much like Silver/Gold is intact in the intermediate term, so is the FFR’s downward path.

But if something were to come along and change that, economic strength, a persisting bull in stocks driving fears that it will drive the financialized economy upward again, inflationary effects from tariffs or otherwise that the Fed refuses to abide… whatever, if something causes the Fed to pause its rate cut regime, the implication is negative for gold stocks to the tune of what would be a much needed and possibly extended correction.

That seems improbable with Trump itching to install his Fed robot, but let’s just keep it in mind.

Again, these “what ifs” are simply that right now. The trends are positive. But that gives a window into a couple things to watch for. Another is the TSX-V/TSX ratio, which led the Silver/Gold ratio to begin with. Again, the 2 Amigos are trending up. If they were to pullback and start to trend down we’d have a warning across most asset classes, including the precious metals.

For now, it’s full bull by the internals. HUI/Gold ratio trending firmly up. HUI/SPX doing the same. As a bonus, Gold/SPX is also looking good in a recovery from its much needed pullback after the tariff-related macro hysterics in the spring time.

HUI is also still in line with its Gold/RINF indicator. Positive. But somebody’s off base. Either the Silver/Gold ratio or Gold/RINF. My guess? Silver/Gold will prove off base.

Finally, another look at the macro alignment that is quite positive for the gold miners rally, with gold weak only against silver and strong against oil (an important operational funda to mining) and stocks (an important “macro” or psych funda to gold stocks).

Bottom Line

Bullish across the board. Gold, silver, miners, exploration. You name it.

Overbought across the board too.

Above we have shown market indications that are still aligned positively for the rally and it will be important to watch those indications closely for any changes in the character of internal leadership and correlations.

U.S. Stock Market

For example, we noted a potential negative signal for broad stocks in the Weekly Notes on Friday. That was a sharp move off the bottom in the defensive Healthcare sector vs. the broad SPX.

Let’s look at another chart showing XLV/SPX along with a couple other defensive (Value & Staples) vs. non-defensive (Growth & Discretionary). The market event in the spring shows what happens when the market corrects for real. Casino patrons internally rotate to the more boring, value/defensive oriented stuff.

As yet, only XLV/SPY has done anything, and it has not yet done much either.

These signals are in line with the deflated VIX and junk bond spreads. Speculation is full-on and patrons are in the mood to make some coin, baby! It’s also high risk behavior. Just ask Doc Hussman.

And sure enough, the leadership chain is bulling along.

Bottom Line

Bullish. Trends up, leadership intact. Also, the seasonal will start turning positive soon.

What could go wrong? Well, for one thing, titillated sentiment. Dumb money indicators finished the week eating stonks, while Smart ones faded.

CCN’s Fear/Greed index is still high neutral, but I continue to take exception to readings in volatility and junk bond spreads, which indicate extreme complacency. CNN rates them “neutral” and “extreme fear”, respectively, when they are both indicative of extreme greed on a view longer than a day or two.

NAAIM were 81% bullish, which is not extreme.

AAII bumped up to 43% bulls, which for them, is over-bullish. But we still await a potential bull jerk into the market by Ma & Pa as an ending signal.

Sentiment is not yet bull killer. Let’s give it some time.

The main risk behaviorally, is complacency. Add that to over-valuation. Much like the precious metals, which are leading the party, the main risk might be theoretical. The Fed suddenly finding reason to pause its rate cut regime. That could freak out the herds.

U.S. Dollar Index

Or it could be as simple as some bad economic numbers incoming (how convenient to have a government shutdown during payrolls week. Or Q3 earnings disappointments, or a good old fashioned “sell the news” of in-line earnings and a market correction just because it’s time.

That could all be up to Uncle Buck, conspicuously perched at support. A hold above 97.20 keeps the buck in play as a potential party pooper to the bulls (U.S. and globally). A loss of 96.20 sends it on the next decline to the dedollarizaton depths.

However, putting on a contrarian hat, think about all those dedollarizers on one side of the boat. What if, as pondered above, the Fed were to issue some hawkish words out its orifice? What if some powerful currency player – whether institutional or sovereign – decides it wants to “support” the buck for whatever reason, including for a trade? I spec’d a long on USD and shorted Euro for this admittedly crazy idea.

Global Snippet

The ACWX (global, ex-US)/SPY ratio seems to think USD is going to fail. However, ACWX/SPY has not quite taken the resistance/neckline of its “complex” inverted H&S pattern. If USD breaks down, global is likely to resume out-performance vs. the U.S. If USD rallies, quite the opposite.

* “Complex” of course being TA speak for a freak pattern that said TA wants to sound intelligent about rather than using words like freak, mutant, etc. I prefer those less pompous words, personally. :-)

Commodities

TSX-V/TSX & Silver/Gold. Both continue to trend up and so commodities continue to have a tailwind by these indications. As with much of the rest of the broader markets, indications like that will be instructive.

Insofar as I have commodity-related stocks, I have been focused on the critical minerals and especially Rare Earths. But as noted in this public post, the play is getting broadcast far and wide in the media. Which means it could be late stage for this phase of the bull market in those items. Holding MP and IDR.

I sold down multi-metallic prospectors MMG.V and PGE.V and have the remorse to show for it. The market is shoving profits down our throats and as noted, I’m going to accept them. Even from prospectors I think highly of. I’ll keep the remaining shares. The U.S. locations and interest from large miners keep these two right up there on my watch list for add-backs if/as appropriate.

As per the Weekly Notes, I waited for a hard pullback in LAC and bought it in both accounts. Then it exploded upward again and I took the profit in the IRA, holding the taxable profit. I am still “Meh” on Lithium, but it’s about what the market thinks more than what I think.

The only Uranium stock I hold now is NXE after a quick profit-take on SRUUF and booking a large % profit on the remaining shares of UUUU. The whole sector remains on watch.

Now, let’s talk copper. I not only let the copper mining sector get away from me, but I actually chose the wrong stock, FCX (since sold), which had a mining disaster on its hands. So it’s not all rainbows and unicorns. I added TECK, which is merging with AU to form a “global critical minerals champion”. Hate the headline, like the copper exposure for now.

I also have BHP on watch because the daily chart speaks to me.

Also speaking to me is the utterly historic decline in the Industrial Metals index vs. gold. Assuming any interim liquidity/deflation scare episode visits the markets (still just an assumption), there could be more difficulty for the cyclical metals.

But it seems worth a shot to take some exposure in cyclical metals producers as long as the cyclical macro remains in play (and the TSX-V/TSX & Silver/Gold maintain their 2025 trends). If said liquidity scare does come about, I’d probably sell and wait. But if the world happens not to be ending, industrial metals are a value.

The chart above could also be interpreted as “the end of the world as we know it”, given gold’s power drive. But for now I want to keep a balanced attitude.

I’m still tentatively holding some Energy exposure with XLE and OIH. Crude oil appears to be breaking down again, however, and NatGas is trying to muster a rally to take back its lost uptrend. It halted at the 200 day average and pulled back from it last week.

Finally, I’ve got fertilizer play IPI back for the 3rd time. I not only watch it, but also its fellows NTR & MOS to make sure they don’t break down. Very rarely have I ever had three successful turns in one stock. But as long as IPI holds support at 28+, I’ll hang onto it.

Portfolio

Gold is and has been viewed as long-term risk management & monetary value/stability in a balanced portfolio.

Taxable Account

In order of position size. Since this is our “savings” account, I reduced risk and bit the tax bullet on some items. I guess if you’re paying taxes you’ve done something right. What remains is the stuff that they couldn’t pry out of my greedy hands last week. Gold stocks still held with the puts doing what they do.

For reference, at some point in 2026 I anticipate that we will be buying our downsized home after selling what I think was the top of the RE bubble in 2024. So yes, it’s a savings account. Indeed, if that starts to look imminent I’ll probably stop displaying it so as not to confuse readers.

The taxable account carries high cash levels as long as cash and equivalents are paying out. This is considered a savings account of sorts, rather than a speculation or even investment vehicle. The goal is to speculate around the periphery. In another market phase (e.g. post-crash), the account may get much more in the game.

Roth IRA (non-taxable, no contributions)

The chart is robo-up in 2025. That is different than the near-vertical HUI, for example. I feel I did a good job being bullish when appropriate after many years of bearish technicals AND fundamentals. So for now, I’ll follow my bullishly conservative path.

However, the next real correction that the sector takes could be an opportunity to buy the hell out of the gold miners. I want to be ready for that. This assumes the macro funda are willing, which I see no reason to doubt at this time. For now I’m going to hold what I hold, hedge as needed and keep a calm pulse.

Cash & Equiv are 76%. Gold stocks are the prime holds, but I’m still poking around elsewhere as well, aware of an internally rotating market.

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 In-Week Notes under the NFTRH Premium menu at nftrh.com for market talk and occasional trading info, if interested. Also, you can follow on X @NFTRHgt for notice of updates.

NFTRH is not to be distributed to third parties without prior written consent

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.