“Internals” are the best way I know of to gauge the progress or regress of the sector. In this case, let’s begin with the Silver/Gold ratio.
While gold and silver are both down nominally today, the SGR conspicuously holds at its uptrending 50 day average. So it is a positive divergence today, to the sector’s negative prices. This keeps open the possibility of a sharp but brief (possibly ending) correction in the PMs. If it breaks down, we start thinking about a more extended and deeper correction.
NFTRH 886 opened up discussion of a macro backdrop (Goldilocks) that could prompt such a thing. But I prefer to gauge, day to day, week to week, rather than set a view in stone. Today’s hold at the SMA 50 by the SGR could be flicker of hope for the quick correction scenario. But also could be a post-decline way station prior to new negativity. I am leaning toward it being a pause in the correction. But it’s a moderate lean at most.
GDX/Gold and SIL/Silver ratios have done good corrective downside work. SIL/Silver, especially. This too could have completed the correction. But that is yet to be determined.
I have taken another sizeable profit on the hedges. With a good recent record of profit taking on PM bear positions I will not mind paying up for more hedges if the sector fails here. But I have learned to take profits from the short side when they are large and present.
Please remember that each of my days has a big sink hole right in the middle, where I am away getting treatments. So in-week, many of you probably have a better grasp on the markets than I do. I cannot micromanage.
I am currently unhedged, with less long exposure as well. But still long the core items, plus.
Also, ready for resumed correction or, heck, resumed bull. But those profits from the short side (DUST, JDST, ZSL and previously puts on GDX and SLV) have really helped me maintain balance. They’ll be at the ready again if needed.
