I don’t want to use holiday seasonals or any other excuse. In being open to, even favoring a hard decline to clear the sentiment pipes, if the Silver/Gold ratio takes out its double top, the party is back on, sooner rather than later and one of my favored scenarios will have proven wrong. That would be the scenario that would see a hard decline to GDX low/mid 50s before Santa arrives a month from now.
As you can see, the SGR and its evil brother, the GSR, have not negated their double top or bottom, respectively. If the “doubles” are to play out to deeper corrections/rallies than merely testing their 50 day averages, it may have to come after Thanksgiving silly week. Perhaps a quick broad market correction into Santa season in late December.
But that is appearing less likely now.
If the ratios break through here (SGR up, GSR down) and it would not prove to be a holiday head fake, the inflation trades we’ve been discussing (a rotation to include more commodities beyond the precious metals, as per the 2004-2008 period) could be engaging sooner than I’d personally expected (mid-2026 or later).
Bottom Line
It’s a holiday week with associated less than reliable signals. But Thanksgiving is not the world, it’s America. So there’s that to consider. I assume the rest of the world is operating normally.
At face value, if silver retakes leadership over gold the indication is that more things will be bullish sooner, and if the Gold/Silver ratio holds and rallies, far fewer things will be bullish.
Dialing back to a precious metals specific internal view, the GDX/Gold ratio never did drop to its SMA 200 (orange), but the SIL/Silver ratio did. Further, both ratios are positive in pre-market and technically appear to be poised for further upside (ref. SIL/Silver’s RSI & MAC as it nests upon the SMA 200).
