Since the last update on 12.17.25, the Gold/Silver ratio remains on plan, right into this morning’s pre-market activity. Below, we’ll update the situation.
First I want to again remind readers that in light of the “new macro”, as I’ve been calling it, there is a very viable case for gold to under-perform silver due to silver’s more favorable ‘cyclical inflation’ utility. With the Fed already ginning up some form of QE and Trump itching to install an obedient robot at the Fed, we could have a mother of an inflation problem in 2026 and beyond (pro-silver).
But insofar as we are managing the year-end Santa party, we are also on alert for an interim reversal of those dynamics, which could come in the form of a hard low and reversal in the Gold/Silver ratio. It is something to be ready for, at least. Just as we were ready for the low and upside reversal in the Silver/Gold ratio last spring (high in the GSR prior to the current decline).
The GSR is down again this morning (-2.75%) and the monthly chart shows that it is homing in on the 57.50 area, which I speculated might contain the decline. It also might not contain it, given the animal spirits in play. But the main point is that the Santa play continues as projected, and in my opinion, risk rises as also projected.
Where ever this decline ends, it is likely to precede a reversal and rally in the GSR. That could come with an interim market liquidity blip… or worse. Please understand that is not a prediction from a crystal ball. It is simply a set of eyeballs looking at a chart and… experience.
I don’t want to scare ‘investors’ out of positions they would otherwise keep and ride. Indeed, I am trying to figure out how much selling I want to do (generally) before January. I don’t yet know if I am going to sell only moderately, heavily or perhaps hedge instead. It is tempting to take puts on SLV, which worked fabulously once before. But… animal spirits.
Decisions like these are what make markets challenging and hence, fun, I guess.
Appreciate what you do for us. Also, thank you for putting (pro-silver) because sometimes it’s not plain to me what you are telling us. Disregard if I’m the only one who does not fully get it.
Hi Mike, I always try, but sometimes fail to write as clearly as possible. But I purposely stop short of writing like a “guru”* or person making predictions. I hate that stuff.
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* Of course, there are no gurus. Only people pretending to be.
Gary, what do you make of the silver miners muted rally in comparison with silver itself?
Well, the obvious is that silver miner investors are not buying the story of a $78 silver price as sustainable at this time. Maybe a bit less obvious is that so many silver miners also mine other metals, including industrial metals. There are not many quality silver pure plays out there, IMO.
Makes sense…guess I’m leaning to the first point…thank you so much for the reply. Really appreciate it!
Sure thing, Peter.