Back to (semi) Normal
Newer subscribers may not know that I was diagnosed with prostate cancer back in January, had surgery in February and recently completed radiation therapy (5 days a week for 8 weeks).
Aside from that there was a tragedy back in the spring involving a non-family member, but which affected our whole family. Other extended family challenges cropped along 2025’s way too. There were a lot of distractions.
2025… you can go jump in a lake!
The only thing that seemed to go right was investment, and I have no idea how I was able to stay on the pulse of the markets as well as I think I did. Must be in my blood. :-)
I very much look forward to 2026. For our market management, that begins now with a look at the…
Silver/Gold Ratio
The one tactical misstep I can think of is that I projected a deeper pullback from the Silver/Gold ratio’s double top than actually happened. In merely pulling back to its rising 50 day average, it did the bare minimum of a healthy pullback (clean-out). But <cue Old Turkey> “It’s a bull market, you know.”
The SGR held the SMA 50 and then rammed upward during the Thanksgiving week. Though I distrust such moves during lower volume holiday season, the technicals are what they are.
Turns out silver’s spike was apparently due to a combination of a power outage at CME group (paper/digital market) vs. the supply stress in one of the “real” markets, Shanghai. Per John Rubino:
“We are witnessing a market that is primed to break on contact. The paper market is glitching because the physical reality underneath is shifting tectonically.”
Mr. Rubino watches the exchanges closer than I do and I’ll factor that conclusion. But I will also prepare for what always happened in the old pre-2022 macro when such bullish ghost stories cropped up. If the spike was primarily due to a power glitch with CME’s “paper” trading, I’d expect a rude correction of the upside spike. If it was primarily due to lack of metal at “real” exchanges that could be a whole other story.
Moving on to our usual dispassionate indicator-based analysis, the SGR has broken the downtrend from the February, 2021 high. That is meaningful, and it is the condition that we noted needs to take place before we can view the move in the SGR as something more than a “trade”.
Putting aside the holiday season and the above noted CME/Shanghai drama, and the fact that the precious metals are part of the broad market rally (a leading part, mind you), the signal is the signal: macro inflationary and permissive of commodity-related asset markets riding the bull.
If the SGR remains at these heights and does not prove to be some sort of grotesque holiday whipsaw, and the TSX-V/TSX ratio resumes its rally, the signals will remain in place for a wider commodity/resources trade beyond the gold miners.
TSX-V is populated by speculative commodity/resources stocks while TSX is a more buttoned down stock market. In other words, when the ‘V’ is leading the backdrop is supportive of commodity/resources complex. Despite my no-brainer projection of a 62% Fibonacci retrace (blue arrow) to clear support, the ratio arrested its decline at the 50% Fib, also at a support level. It was a viable bottoming point.
Heavy Macro: The Story Gets More Complicated
So here we are, with an FOMC caveat smack in the middle of holiday “silly” season. While there is often turbulence during or after FOMC, 86% of CME traders expect the Fed to cut by .25%, punishing savers by another increment, attempting to support asset markets (and a very long-term inflationary regime).
Let’s also not forget that the Fed has terminated QT, and has QE at the ready in its back pocket. But recall from NFTRH 887 on November 2:
Out the back door the Fed has ceased its Quantitative Tightening (QT, which has driven the Fed’s balance sheet holdings downward since 2022) and will now either embark on a market pleasing expansion of its balance sheet through forward QE or at least stop it from declining (depending on what they do with other bonds, like MBS [mortgage backed securities], as they bring more Treasury bonds onto the balance sheet).
Now consider this, by way of Lyn Alden:
The above was projected by the Fed back in 2023. Beginning last week the Fed ended its drawdown (QT) of Treasury bonds & MBS, in favor of a plan to “invest” in Treasuries and leave MBS well enough alone (they will not buy MBS to support the mortgage market). The net result is market liquidity on demand and in my opinion, Inflation onDemand, heading into 2026.
In this case, there could be a sort of weird Operation Twist in play, where a certain bond is favored over another. In this case, T-bills over MBS. This does not seem nearly as dangerous for gold and the inflation trades as the original Op/Twist did, when Bernanke “sanitized” inflation by selling short-term Treasury bonds (today they intend to buy them) and buying long-term Treasury bonds, forcing yield curves to flatten (into economic boom signaling).
That man was an evil genius. Look at how perfectly the macro behaved to his will from the creation of this manipulative trick in 2011 until 2020 and the Covid crash.
I digressed above. Here in the new macro it looks like they will favor short-term Treasury over MBS and by extension a more general market liquidity play, letting the bloated real estate bubble (and all its “affordability” headlines) fend for itself. But I don’t read “curve flattener/boom” (ala Op/Twist) into the current operation. I don’t read anti-inflation into it.
So the Silver/Gold ratio’s upside reaction may have also gotten a tailwind from the Fed’s withdrawal of QT and incoming QE. As my late friend Jon Auerbach said back in Q4, 2008 as we compared notes: “It’s inflation all the way, baby!”
But this may also give FOMC a little leeway to act a little tough next week on the Funds rate. They will most likely cut, but the press conference to follow it gives Powell the opportunity to verbally pretend to be tougher than the Fed actually is when considering all the operations going on out its back orifice.
In reality, they have been mopping up their previous inflation behind the scenes (QT) and will soon manipulate liquidity higher (QE) through a complicated interplay between Treasury purchases (mainly t-bills) while leaving the MBS market to fend for itself. Lower real estate prices are likely in the offing as 50 year mortgages or not, that is not a sector targeted for support. It’s one way to address the “affordability” debate. Wiz?
The Fed is a very cynical animal. It inflates as a matter of due course. But it abhors being thought of as an inflator. It fancies itself as a fighter of inflation. Pure evil… but I guess I am biased.
The post-Bernanke Fed is getting sneakier, more cynical and innovative all the time. My battle tested opinion.
Looking Ahead to 2026; Real vs. Paper
Regardless of what goes on from today through Santa, the big picture for 2026 is looking like a liquidity spigot. That’s another way of saying that the easing Fed (Funds rate plus QE) and an always ready to fiscally inflate Trump administration (debt increases, 50yr mortgages, Trump Accounts, other spending, etc.) will result in an inflationary backdrop. Possibly an intense one.
While we have all sorts of evidence – some of which is detailed above – about how it will come about, the Continuum chart told us in 2022 to be prepared for it. A simple and beautiful picture.
While we all know that the Fed and government have routinely inflated the system for decades, every time a hint market liquidity trouble came about, the long-term downtrend in long-term (in this case, 30yr) Treasury yields always gave them license to inflate, as if the there was no inflation problem. After you get done laughing, let’s proceed.
The difference since the 2022 trend break being that now it is obvious and the cynical, money printing Fed and spend-happy government have nowhere to hide. The bond market is flashing warnings for all to see. By their own statements the Fed (QE) and government (fiscal spending du jour) will attempt to inflate as usual. But our thesis has been and still is that it will not be so easy, or at least it will not be so successful.
Whereas until 2022 the bond market did not “perceive” a bad inflation problem, now it does. So when they inflate against this backdrop might not the masses seek out the money (Au, Ag) and materials (PGM, Ag, u3o8, Cu & industrial metals, energy, REE, etc.) that will by definition rise in price as more dollars are printed?
Revisiting the MBS discussion, I think it is all the more important to own things of real value not intimately tied to debt, as the mortgage/housing market is. Is it not valid to think that real estate and its mortgage market were poster boys of the inflation during the successfully debt-leveraged era that ended in 2022?
By extension, another “paper” market that should do relatively poorly – even if it maintains appearances in nominal terms – is the stock market. Another chart I cannot get enough of, for its messaging.
Why would stocks do so poorly in relation to gold despite oncoming inflation (which has benefited stocks for decades)? Because the major signal in the bond market (2022’s trend break in long-term yields) would be a more economically corrosive inflation, AKA Stagflation. That is what the upward trend break in yields means to me.
Focus on Gold Stocks
As noted above, the story may get complicated. NFTRH is not the pump station down the street. It is not your teammate, reinforcing your (or my) beliefs. NFTRH is not on YouTube making sensational titles and sounding like a Goddamn promoter to harvest eyeballs and eardrums. NFTRH digs up macro signals and presents them honestly, not to be overreacted to, but to be considered.
So let’s get back to the gold stock analogs of the past, in consideration of an anticipated inflation phase. As often noted, gold stock prices tend to be more positively aligned, price-wise, with silver leadership over gold (note the green and red arrows in the index and the Gold/Silver ratio) than gold over silver. Exceptions were Analog #1 (2001-2003) and 2023 into 2025. Those are times the miners were more aligned, fundamental-wise, with gold leadership.
The summary of the above is that gold stocks often make their best rallies against their best fundamental backdrop (disinflationary/counter-cyclical) and with a deteriorating one (inflationary).
In 2004 the Gold/Silver ratio plunged, much like it is doing today. Silver’s leadership has been positive for gold stocks for most of 2025, and that could continue into year-end. However, the red shaded zone in 2004 shows a period of transition for gold stocks, from pro-fundamentals to negative fundamentals (amid that long-ago “inflation trade”).
Gold stocks took a tradable (down & up) correction into 2005 before beginning the next bull market leg up. But that leg up was the beginning of a bubble, as the miners followed the inflation trades while gold mining fundamentals eroded due to the effects of inflation. This was resolved in the crash of 2008.
Considering the structurally inflationary macro that I think will develop, it is a good idea to keep the 2004 correction in mind, and if/as the inflation unfolds in 2026, also keep in mind the bubble years of 2005-2008 if/as the gold miners regain traction to the upside.
A caveat against getting too beared up, however, is that the future inflationary phase is expected to be of the Stagflation variety and hence, economically corrosive and hence, counter-cyclical. Gold miners could do much better than during the cyclical inflation phase of 2004-2008.
The 2004-2008 phase is a fact of history. It is something I want to see and want you to see as we rationally work our way forward. All through the 2005-2008 the touts touted. Boy… did they tout. They made up reasons why the fundamentals were good (e.g. boneheaded “inflation” rationale). They towed the party line. Today there are gold stock luminaries touting exactly that, how great the funda are going to be in 2026.
Just be aware (of an interim negative potential), is all. NFTRH received a good percentage of subscribers who were refugees from the damaging hype produce by [sources unnamed, but maybe you can guess a few]. The bottom line is that there is precedent for gold stock correction and/or upside bubble bull market under an inflationary macro regime. Let’s recall that we projected the 2025 bull run in positive alignment with disinflation and the Gold/Silver ratio (which tends to be an anti-inflation signal).
The Gold/Silver ratio is tanking and that is an inflationary signal. As we’ve been noting over the last many weeks, there are other aspects of the commodity/resources markets. Some may play catch-up to, and in time potentially outperform gold stocks. I clearly remember the cheerleaders merrily pumping and raking in eyeballs right into 2008, and the crash later that year.
Personally, my plan is currently to rotate out beyond gold stocks. I believe they will no longer be special if the macro goes the way it appears to be setting up. We might especially be aware of this dynamic if everything parties together this month. But in no way am I near ready to abandon a bullish gold stock view on the bigger picture.
As you will see below, gold has barely gotten going vs. the bubble-backed stock market and the miners have barely gotten going vs. their product, gold.
More Precious Metals Indications, Including Positives For Gold Stocks
In the here and now, the Fed proxy (t-bill yield) is still pointing down and that is still a tailwind for HUI and the gold stock sector. Barring any December surprise, this could carry the bulling miners into year-end.
Also in the here and now, gold mining fundamentals remain positive as most markets (not named silver) trend down in relation to gold. This remains a “best of both worlds” picture where silver is leading price signals and gold’s relative performance to most markets is reflecting positive funda signals.
Here is an interesting chart that could hint at the wider commodity (inflationary) play noted above. Gold miners (anti-cyclical inflation) vs. copper miners (pro-cyclical inflation) have been consolidating in a volatile fashion.
This consolidation is in preparation for either new upside (and a likely dis/deflationary macro) or failure (and a likely inflationary macro). Considering much of the report above, the view favors inflationary. But the other, less likely, option is always possible; a liquidity crisis despite the Fed and government’s best liquidity pumping/inflationary efforts. This is why we watch market indications all along the way, rather than setting a view in stone. That’s what ideological promoters do.
In that latter case the gold miners could indeed shake off any correction ahead and drop our jaws with upside that most would not expect, but that we would know is fundamentally backed.
So after dispensing some negative possibilities for gold stocks regarding inflation in the previous segment, let’s review a chart that says gold is only just getting going in relation to the stock market. This is a major indicator for gold stocks.
This long-term chart shows the constructive Gold/SPX ratio along with the HUI/Gold ratio that seems to ape Gold/SPX quite well. Indeed, since 2011 HUI/Gold has tracked Gold/SPX much better than Gold/Commodities.
This chart shows gold stocks relatively strong to their metal lately and silver stocks relatively weak to their metal lately. This is a reflection of the crazy vertical shot silver took during Thanksgiving week – I assume on Fed QE hype – as gold stocks have actually declined vs. silver stocks. I don’t want to invent a message here. It is just presented as an interesting “food for thought” chart. SIL/Silver does need to hold here and start to rise in order to avoid a negative signal.
GDX needs to make a higher high in order to eliminate a double top scenario. You could view the negative divergence by RSI as bearish at the secondary price high, or you could view its stair-step higher as having plenty of fuel for new upside. Enter FOMC and the volatile week that often attends it.
Some of the above is short-term noise. What is not noise is the big picture (log) chart of HUI residing at all-time highs. With the extreme levels of gold stock hatred by most patrons from 2013 through 2024, despite a stealth bull market that began in 2016, this slingshot to new highs is logical. If the macro swings inflationary (especially if it is stagflationary, as expected), gold stocks may no longer be special, but in gold’s projected out performance to stock markets, they are expected to maintain a bull market.
Again, reference the HUI/Gold ratio and Gold/SPX ratio a few charts above. The next inflation phase could be the Stagflation variety and not at all economically friendly. In other words, the counter-cyclical sector may yet have another trick up its sleeve.
As you can see, monthly HUI (log) is in blue sky. It’s bullish. It’s more overbought than it was during the 2003 analog period. And that’s okay. Corrections can and will happen. It’s a bull market.
Silver’s monthly (log scale) technical situation has gone from “getting overbought” to very overbought since we last viewed this a few months ago. Do you know what else it is? Massively bullish.
Sticking with long-term log charts, gold is of course overbought, and bullish. But correction concerns aside, think again about the long-term Gold/SPX chart above. It paints the end of the bubble-policy era in stocks and the beginning of a new era. So why on earth can’t some of the gold bugs’ loftiest projections come about? Personally, I would not be surprised in the least by $10,000 gold in the next few years.
Bottom Line on Precious Metals & Gold Stocks
We have reason to expect a correction of some kind, if not sooner, then later in H1, 2026. We also have reason to expect an inflationary macro. Hence my cautions above about tuning out robo-promotional interests. Especially those touting inflation and gold stocks in tandem.
However, if the macro goes Stagflationary as I think it will, either directly or after an interim liquidity problem (which is less likely due to Fed rate cuts/QE and government debt-spending, funding, gerrymandering), the economy will likely suffer and the stock market will greatly under-perform. In other words, more counter-cyclical winds would blow than during the previous macro phase that ended in 2022 when policymakers were able to spray “nice” inflation all over the place.
That will favor gold and with respect to stock sectors, gold stocks. Silver is a wildcard. A potentially very bullish one in the coming years now that it is out of the barn. If gold can envision $10,000, silver could easily see $100+. We are talking a years-long macro phase here. Not any given multi-week or multi-month party season.
It is ever more important for us to realize that the macro changed, and it did so in a long-term fashion, not just a passing phase. Our continued right-minded interpretations are demanded.
Wrapping Up Everything Else
I plunged deep in to the macro and focused on gold stocks. That blew my time as the nerd just kept on nerding.
Stock Market
SPX remains bullish, as long as you don’t measure its units in gold ounces. The measured target is viable if Santa/party season continues and lives up to its reputation.
Global stocks have not made any sort of notable move in relation to SPX/SPY
Which is interesting, given recent USD weakness (a weaker USD has favored global stocks on a relative basis over the last several years). USD declined from a small double top after its recent bounce, failing at the same resistance level it failed several times previously (100 +/-).
Wouldn’t it be something if USD invalidated eliminated its double top with a big spike, much like silver did? Anything is possible. Especially when manipulative interests may want to “paint” certain pictures.
If the year-end rally prospect is going to gain traction, USD should fail. If it is going to get a rude surprise for Christmas, USD will likely rally. As it stands now, with an outwardly antagonistic FOMC this week, USD is biased bearish. It would be in need of some sort of Fed December surprise (expectations management per the paragraph above).
The reason I have mentioned this a few times in this report is because the Fed so overtly switched from QT to a version of QE. I cannot discount the cynicism and paranoia * I perceive and assign to this oval table of buttoned down eggheads.
In a Dec. 2nd NFTRH+ update we noted that the defensive/risk-off indicator XLV/SPY ratio had topped and turned down. That is still the case and the underlying market indication remains “risk-on”. We also noted that the QQQ/SPY ratio had broken above its 50 day average. Again, risk-on.
As you can see, the U.S. stock market leadership chain (SOX > NDX > SPX) is fully intact.
* As they pretend not to be primary creators of the inflation problems they, well, create.
Sentiment
NAAIM (investment managers) ticked nearly as over-bullish as it gets, just under 100%. This is a condition that should be in place at a market top. As you can see, this condition has only has only preceded minor market volatility, post-April. But it was in play during the topping process from Q4, 2024 to Q1, 2025. This is contrary bearish.
AAII (individual investors) got more bullish, nearly to their 1yr bullish high. But have not produced the “jerk” into the market we are looking for to perhaps signal the end.
CNN’s Fear/Greed index backed off from Extreme Fear to just plain old Fear. However, as you know I take issue with their reading of the VIX. In ticking a new 2+ month low, the VIX is indicative of extreme complacency, and yes, greed. So let’s call the index neutral for now.
Market sentiment is biased over-bullish, but it is not standing in the way of more short-term speculative upside if that is what the market does, as is still favored.
Commodities
CRB index has been sideways-going since it topped out after the 2020-2021 inflation hysteria. As disinflationary market signals have engaged CRB has consolidated, seemingly in wait for the next inflation phase.
It’s ready. The 30yr yield Continuum chronicles the new macro, post-2022, and CRB appears to be tinder awaiting a match. That match could be a combo of global supply/demand in an increasingly tense geopolitical world, Central Bank money printing, including the Fed flipping dovish on the Funds Rate and spewing QE out its backside. In other words, a global “commodity grab” amid dovish monetary/fiscal policy regimes.
It appears this is what CRB is patiently waiting for. I favor a bullish outcome in 2026.
I would divide commodities into two segments:
- Down and dirty stuff like Oil/Gas, Industrial Metals, Agricultural, and
- What I have in the past called “specialty” stuff which is now called “critical” or “strategic”. Here we have the likes of Uranium, Platinum/Palladium/Rare Earths/Lithium, etc.
I think that copper, nickel and silver can cross dress as “strategic” in the current macro. To much fanfare, silver was recently added to the U.S. list of critical minerals.
The critical stuff has gotten big bids and in some cases, hard corrections, due to the trade war and associated geopolitical tensions. But if the macro swings inflationary and the CRB index breaks out to the upside, we’ll likely see oil, gas and more down and dirty metals go bullish. Throw in coal, agri commodities and the kitchen sink while we’re at it.
So far it has been selective, and we have been all over that selectivity. With the big pullbacks in items like REE plays MP, LYSDY and IDR, I am long again. Same goes for Palladium & Platinum. Uraniums URNM, UUUU & UEC as well. Plus Li prospects SLI & LAC.
I have retained a few Energy stocks (XOM, CVX & AR) in expectation of a low in crude oil and rally in gas. We were right there on critical/strategic stuff and I want us to be ready for the down and dirty stuff. In a perfect investing world, 2026 would see the commodity/resources play broaden out from precious metals and critical minerals to the whole boat load of ’em, per the CRB index above.
I want to slowly pick off items here or there (as I did last week with TECK after it was highlighted in NFTRH 891) as the situation moves forward.
Stock Talk
My watch list is shrinking because my holdings of “bull stocks” have been growing. Last week PATH, ALAB, ZS and ZOOM were added to already held AMD, QCOM, PANW, META, etc.
These mostly over-valued Tech related stocks are my seasonal holdings for a would be seasonal rally (7400 SPX?). But as with most of 2025, I am week-to-week in a news-stoked market. That tack has worked well.
My gold stocks held are the preferred ones. I successfully traded MAIFF (MAI.V) again and feel less close to it now that Doug Ramshaw is gone. But I have it on watch. They still need to permit to complete the picture. You can see the items I hold in the portfolios below, but still watching WDOFF (WDO.TO) and WRLGF (WRLG.V) after letting AYASF (AYA.TO) fly too quickly (it’s on watch for a would-be landing).
As previously noted, I swapped out some Healthcare stocks due to the internal rotations back toward risk. Out went REGN and BIIB for unexpectedly solid profits, while MDT, STE and GILD remain.
Mainly, here in a possible year-end rally situation, I want broad – as opposed to focused – exposure. I want balance. I think I have that, including my long-held short-term Treasury bond exposure.
Portfolio
Gold is long-term risk management & monetary value/stability in a balanced portfolio.
Taxable Account
In order of position size.
I was asked to once again provide the notes in the right side column, so here they are.
***Pardon the accidental omission of stock symbols***
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.
Trading Account
No positions.
Roth IRA (non-taxable, no contributions)
Suspect holiday season or not, the chart did what I’d want it to do (in order to avoid further defensive action), and held the trend line. To boot, it has formed an Ascending Triangle, which is usually a continuation pattern. Let’s hope it “continues” upward.
Cash and income generating equivalents are 72%. I’ll remain ready to speculate further into year-end or alternatively reverse course if that favored view is wrong.
Last week:
I have TLOFF, BITTF, NOPMF, DBLVF (if it pulls back further), CCJ, TECK, ADBRF and others on watch.
TLOFF and TECK were added. I have a stink bid in for some BITTF (hard to buy) and the others remain on watch along with other commodity/resource, PM and “bull stock” items.
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.
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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.
