7 Days; A Successful Year Nears the Finish Line…
Friday gave us a strong hint that Santa may have arrived. However, if he has arrived he’s only got 7 days to provide the gift of additional profits if the classic Santa rally will actually be a thing this year.
While it could extend well into January, if a rally has begun as it appears it has, I plan to get more defensive into New Year’s Eve. With the bullish hint by the TSX-V as noted on Friday, I expanded holdings in the commodity/resources/precious metals space, increasing ELE (per NFTRH+ update) and others (ref. Portfolios segment), along with some Tech oriented stuff like PATH (bought back per NFTRH+ update), ZM (increased), ZS (added) and QCOM (added 2nd position) to go with some more defensive(ish) holdings in Healthcare/BioPharma.
…With a potential Spanner in the works
Back on commodity/resource stuff, I have been considering the prospect of an extreme low in the Gold/Silver ratio (ref. NFTRH+ updates #1 & #2) in the same light we considered the extreme low in the Silver/Gold ratio (high in the GSR) back in the spring.
It may be asking a lot for the GSR to bottom and turn back up in early January, given the downside momentum. But at some point we will get a reversal and when that happens it is not going to be comfortable for much of anybody, especially if the USD finds an interim low. Perhaps the GSR will find a low at or above the 57.50 level.
Here is the thing; back in the spring I made no predictions or grand statements. I simply noted that the SGR was dive-bombing and that such dive-bombs have tended to be followed by sharp recoveries. Well, it has been a recovery and then some (tank job in the GSR)! With the SGR’s recovery in alignment with favored big picture macro theory, I think silver may be a star performer in 2026 as this upside impulse in its price implies.
But considering that a rising Gold/Silver ratio often comes with market stress, “interim” to the projected 2026 “inflation trades”, I think there is danger. It comes in the form of…
- The tendency of markets to seek equilibrium (the Gold/Silver ratio is out of whack to the downside) after extreme oversold (or overbought) readings.
- The usual cheerleaders are cheering and sloganeering, while touting (IMO legitimate) supply/demand and other fundamentals.
- The Santa rally itself, if/as it continues, is a holiday-aided thing. A party of sorts. Punch bowl and all.
I think we stand a chance to close out a very nice year in fine fashion. I will plan to evaluate more next week. But if it does get silly to the upside in the short-term one might be compelled not to be greedy and to consider whom one is running with (MOMOs, FOMOs and machines).
Risk vs. reward now favors gold over silver.
Precious Metals, Stocks & Commodities
Frankly, I have no idea where silver may begin its handle-making on its new Cup. Silver is like a starved, caged animal released upon the landscape after 40+ years. In making a higher high to point 2, it has already sent a bullish calling card for 2026 or beyond. With the overbought condition, when the handle starts it will start a likely multi-month correction and ticking clock before the next rally.
It seems pretty evident that silver is going to 92, or the round number 100 or who knows where above that? But it is one thing to project from a chart that has been decades in the making. It is quite another to calmly sit by as it plays out. When the volatility comes, it will likely be dramatic.
Now, what of gold? While overbought nominally, and a 2025 superstar in its own right, it is no longer a bargain in terms of US Federal debt.
On a percentage basis, since gold was decoupled from the US dollar in 1973, it has done its job (and then some) of protecting its holders from the potential perils of ever expanding government debt (and spending, which is the fiscal part of the monetary/fiscal inflation problem). However, gold bugs can no longer claim gold needs to rise due to this metric.
Technically, gold is also extreme. Silver is at an extreme. The Silver/Gold ratio is at an extreme. HUI is at an extreme.
However, here is what is not at an extreme. If the precious metals are extreme nominally, in relation to the thing (stock market) that has benefited from the policy bubble to epic proportions, things are only just getting started.
Indeed, since 1990, when U.S. debt and the stock market were in normal and healthy unison, stock market participants have grown used to leveraging the debt picture for (paper) asset gains. Exceptions being the 2008 and 2020 liquidations, which were natural market forces trying to clear the system before our inflating heroes stepped in.
There is a chance that the primary play in 2026 – before an obvious “inflation trade” takes hold – could be bearish, as in short setups and all. The charts above imply that if the precious metals do take a hit, stocks will take something worse. It’s a work in progress, folks. I am fleshing things out at year-end.
I have to swerve away from the deep dark theory this was leading me to. We’ll have what is sure to be an interesting and exciting 2026 to work that side of the street. But for today, I am on a tough time schedule and we are in…
…mode for a while longer.
As part of that, over the next 7 trading days I want to focus on that, now that we understand a caution flag is likely to be raised into January.
For the rest of the report I’ll just talk, free style, about my positions, watch list and I suppose, strategy.
Party On!
Sort of. While keeping or adding back Healthcare positions (GILD, REGN, STE, MDT), I decided to imagine a recovery in animal spirits for the final drive to 2026. PATH was added back, a second QCOM position was added, ZM was increased, ZS was added back. This in addition to a few other odds and ends from the standard stock world (AAPL, ES, already held).
I did not pull the trigger on ALAB, a stock that owes me nothing at all. It was a great 2025 hold/trade. But it’s high on my list if Santa continues but ALAB pulls back a bit and retraces some of Friday’s rally.
Globally, I still have BABA on watch.
Friday’s little expression of euphoria kicked SPX, NDX and SOX back above their 50 day moving averages. A perfect entry way for Santa. Now the cheerful portly man in red just needs to ride through it. Sentiment is quite over-bullish but not yet hideously so. That is perfect. Santa’s much more likely to ride in amid over-bullish sentiment. Hopefully by the time he exits we’ll have an eye-popping over-bullish reading (along with an AAII knee-jerk).
For most of 2025 we’ve had a theme of viewing the market week-to-week. Well, now I am viewing it day-to-day. 7 of them to be exact.
Precious Metals & Commodities
I sold silver holder PSLV too early! Better too early than too late. Profit is always a good thing. Blah blah. Same goes for Pt & Pd holder SPPP. But again, I am ensuring a profitable 2025. Those funds were rotated elsewhere. Namely, smaller, more speculative “resources” and precious metals stocks like MMNGF (MMG.V), PGEZF (PGE.V), UUUU, CDE, ADBRF (ALDE.V), AMEGF (AE.V) and AYASF (AYA.TO).
Watch list includes looking at a 2nd MP position, LYSDY, buying back traded items like IDR, DC and SLI if they were to pull back enough (otherwise, they’ve provided great profits, and see ya next year).
Filed under the category of never go by a chart exclusively, TLOFF (TLO.TO) announced positive news and rammed upward by 30% on Friday.
After the transaction Lundin will own 20% of TLO and this appears to be a win/win. TLO is another that owes me nothing (although I owe a thank you to subscriber/geologist MC) as the shares were sold for upwards of 300% on average.
I let TLO’s less than attractive chart keep me from buying, went to take a look for a buy on Friday and boom, +30% and me on the sidelines. It’s showbiz. And on watch for any pullback.
Here is my watch list, which does not include items already held that I may increase. The green marks denote the ones I am most interested in.
But frankly, aside from an ALAB here or AMD there, I am probably content to just add to existing positions if I choose to beef up for Santa.
Also, I tend to stumble upon items in real time, not having watched them previously. That happened previously with PATH.
As I was scanning Cathie Wood’s ARKK holdings checking charts I saw a prospective chart for PATH, did a quick funda review at SeekingAlpha (as an SA author I have premium access to fundamental stock research analysts) and bought.
The ultimate message, however, is that we’ve got 7 days. Not necessarily 7 days before a bear arrives and not necessarily 7 days of bullishness. It’s all speculation based on work, gut and history. It is simply how I am viewing the final days of 2025. Nothing more, nothing less.
Portfolios
Gold is long-term risk management & monetary value/stability in a balanced portfolio.
Taxable Account
In order of position size. Heavy cash & short-term Treasury bonds. The Fed is cheapening cash, so more S/T Treasury bonds may be in the offing. Also, I’m not against adding a few more stock positions for the very short-term. Quality Precious Metals royalty stocks and some miners, some Healthcare, Tech and Commodity related stuff are held. 7 days, and then evaluate.
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)
The chart held the top line of the Ascending Triangle “continuation” pattern. Okay now, let’s see it continue for 7 days, at least!
Cash is 52% and paying less income, post-FOMC. Short-term Treasury bonds are at 29% and paying income. Stock holdings are a mix of Precious Metals, Tech, Commodity and Healthcare stocks. If I am going to lever in further, I’ll need to do it quickly.
Cash & income-generating Treasury bonds are at levels that are right for me and my real-world situation. Your situation is different. Cash will be adjusted as needed.
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