It’s a double top in the silver-centric “metallic credit spread”. We anticipated its bottom and upturn in the spring and recently, its double top into a decline.
Upturn = tailwind for commodities, resources, precious metals and other generally anti-USD markets.
Decline = headwind for those markets.
Now the question has been minor headwind or significant headwind? The Silver/Gold ratio is dinging the “minor headwind” level this morning on the pullback to the 50 day average. This could arrest the decline in the SGR and many items that depend on silver leading gold. But I am not betting on that.
A drop to one of the lower supports and/or the (orange) SMA 200 would be preferable for a real clean-out, prior to new broader rallies in markets. If it holds here and takes out the double top it’s Wayne & Garth’s party season. If it drops further and finds support, I’ll have more conviction on the year-end rally theme (i.e. a solid buying opportunity).
Okay, off to my 2nd to last treatment! I am so psyched. 8 weeks ago it felt like it would be a lifetime. But time flies when your having fun.
