Since silver and its anticipated leadership to gold was the linchpin of our plan in the spring to get bullish more than just gold mining stocks (fanning out to wider broad markets), let’s update silver today. First nominally, and then vs. gold.
Since we last viewed this daily chart, silver has continued to bounce. Referring to the orange Fibonacci grid, it had previously ticked the 23% Fib retrace level, and today dinged through and pulled back from the 38% level. That qualifies as a valid bounce within a larger correction IF that is what is in play.
Why might an ongoing correction not be in play? Because the Silver/Gold ratio is still rising after its hold of logical support. So there is no negative divergence inside the market from this view.
Another option could be that silver simply has higher to retrace on the bounce (50% retrace @ 50 and 62% retrace at 51) before a resumed correction.
Bottom Line
While I am still short/hedging gold stocks and silver, along with the Euro (a pro-USD position), the still-rising Silver/Gold ratio is opposed to those positions. However, as we’ve noted lately, another sector internal miners/metals (GDX/Gold & SIL/SILVER) has not recovered. Also, USD furthers its bounce and is a candidate to put on a continued contrarian counter-trend bounce or rally.
Somebody is off-sides here. Either the USD in its bounce or the Silver/Gold ratio in its bounce.
