Another Silver Antagonist
In addition to the margin requirement regime initiated by CME Group, another antagonist to the silver price has emerged (TY for the heads up, DT).
A January Shock for Gold and Silver? Here’s What’s Lining Up
The theme is rebalancing commodity indexes to reduce precious metals weightings as a matter of automatic policy, not manipulation, price controls or any other such action.
To be quite frank, I am letting this roll off my back. Just as I am the CME actions. I never worry about the price of gold, even when it’s in a bear market. Viewing it as “value” in a value-challenged system has really helped me in that regard. Silver has been a different story, due to its volatility and more commodity-like character. I don’t worry about it. But I have stayed out of the way of it when I’ve thought it vulnerable.
But we are in Wonderland, I mean, the new macro. If the combined CME/Index rebalancing knocks the metals down, it will be viewed as a buying opportunity. Especially in silver, which, when it moves it can skyrocket or, in this projected case, dive bomb.
At this point I’d probably be looking at adding combo gold and silver stock exposure (e.g. AYA.V, SKE, HL, etc.) to go with currently held CDE/NGD, WPM, TFPM, DVS and ELE (gold & poly-metallic) and a couple poly-metallic explorers. That’s the plan when the next correction comes. And it will come.
For me it’s as simple as being mentally and functionally prepared. Non-fundamental issues like margin requirements and index rebalancing, which are mainly products of the futures/paper markets, are opportunities to own equity in real companies because they instigate volatility, which buyers obviously need.
Precious Metals & Commodities
Thursday’s NFTRH+ updates discussed my original downside target for the Gold/Silver ratio (now being tested) and an alternate target if things get really wild to the bull side in the near-term for precious metals, commodities and the “inflation trades”.
In favor of the latter is the standing of the TSX-V index and its relationship to the TSX. Da ‘V’ ticked a new high for the new cycle that came after it pulled back and retraced 38% of the rally from the April low. It’s obviously trending up on a daily chart and not as overbought as it was at the last two highs.
This gives me a related thought about the 2026 PDAC, which runs March 1-4. This is where a who’s who of mining, financing and newsletter luminaries (yes, I am smirking in bemused fashion as I write that) and exploration prospects alike gather to peddle their wares.
With the way that the mining indexes, the metals and the TSX-V look today, might we anticipate an end date for this leg of the bull rallies sometime in the run-up to PDAC? We might. I don’t want to be a top-caller for no reason. But I do want to be a pointer out of possible flash points.
And wouldn’t you know, the silver seasonal seems to roughly agree that a price high could be coming around that time, as it tops in April and bottoms in June. Give a +/- on the timing and maybe around PDAC.
The gold seasonal pattern tops in early April, goes sideways and takes a moderate downturn into June (all due caveats about the average playing out in any given year).
Back on da ‘V’, its ratio to the senior TSX index is also a-okay currently after it took a 50% Fib retrace of the rally from Q4, 2024, bottomed and rallied after that very viable corrective pullback.
The bottom line of the above is that if there will be near-term lower levels to come in the Gold/Silver ratio, if USD…
…will halt at the moving averages, the seasonal averages play out and TSX-V remains relatively strong, we could be looking at late winter/early spring before any real bearish stuff ensues. It is very speculative at this point. Problems can and do sometimes come right out of left field; charts and seasonals be damned. Risk of the correction to come is high now.
We have not looked at this chart in a long while. It’s logical progression was gold leads, silver follows, the Silver/Gold ratio and TSX-V follow and… still waiting on the CRB index. Though crude oil has some heavy macro fundamentals working against it, I’d expect it to follow suit eventually (it tends to lag gold by a fairly wide margin) and drive the CRB.
Meanwhile, back in the precious metals patch, the sector internals are doing fine as the HUI/Gold ratio ticked new highs for the cycle, as did HUI/SPX.
The Gold/SPX ratio is still bullish and indicative of a positive backdrop from the macro vantage point of conventional investors.
Taken at face value, the Gold/Oil ratio argues that the HUI/Gold ratio should continue to rise as a continued rise in the miners’ product in relation to the miners’ cost input is automatic bottom line benefit. Gold/SPX argues that gold has not gone far enough in SPX terms for the HUI/Gold ratio to make a big move just yet.
A final chart featuring the HUI/Gold ratio, including the 2001-2003 analog, which played out in Q1, 2025. As the ratio continues to rise (probably a long way to go in the next few years) HUI is now rising with the declining Gold/Silver ratio, as per late 2003. Then HUI topped into an extended bull market corrective consolidation. My guess is that is what is ahead.
This chart shows why we should watch the tanking Gold/Silver ratio closely. While there were exceptions in 2001-2003 and 2024 into 2025, the gold stock sector usually corrects when silver loses leadership over gold. This is especially so after hard declines in the Gold/Silver ratio. We’re on a hard decline in the Gold/Silver ratio. Again let’s reference the two most recent NFTRH+ updates last week, each covering the Gold/Silver ratio with two potential downside objectives (one reached, one still open).
Currently, HUI is in line with the Gold/RINF ratio, which has been great guide for us over the last couple years.
The gold stock bull market has run with weakening Fed policy, as expected. The fundamentals are very good, policy is permissive and so what could go wrong? In my opinion, not much, other than a normal correction that will come simply because it is time. The longer-term bull market is in great shape, however.
Bottom Line on the Precious Metals
The metals, miners, explorers and royalties are generally all still in bull mode. I believe it is a major bull market. What’s more, the fundamentals are strong.
A correction will come and we now focus on March 1st, the beginning of PDAC, as a handy reference point on a time frame that makes sense from multiple perspectives.
More on Commodities
With tailwinds like the Silver/Gold ratio and the TSX-V and TSX-V/TSX ratio intact, various commodities are expected to participate into the time frame of a pervasive broad market correction (again, let’s look to late winter or spring while respecting risks currently in play).
Fundamentally favored areas are Uranium, REE, Nickel, Copper, PGM and maybe even Natural Gas, if the story of its use in AI data centers is a sound one. With the exception of Gas, stocks associated with these commodities are rallying well and/or rebounding well.
Crude Oil is still trending down.
Despite this, I added the Energy sector (in the regular taxable account, not shown below). I may also add it to the IRA, which is laboring with two Gas stocks, EQT and AR.
XLE was added after the Trump/Venezuela hype as it rammed upward on the hype, tanked on reality, and tested support. This is in no way a position because of Venezuela. It is a portfolio item that tested support. Period.
In line with the still-bullish TSX-V index, I’d like to continue looking to pluck a few candidates from the metals exploration patch. Either increasing the currently held likes of TLO.TO, OGN.V, MMG.V, PGE.V, ALDE.V or adding a couple new ones.
Stock Markets
Dumb money is too bullish. Smart money is too bearish. That is not a bull market stop sign. It is a caution about the dynamics that will be in place when the market does finally top.
The chart also shows what a real buying opportunity looks like. Recall in the spring we noted that the markets were hideously over-bearish? Well, some day we’ll see readings like that again. It will be a table pounding ‘buy’. We are far from that day and hence, why I manage risk so tightly now.
This picture tells a macro story, especially when you marry it to our 30yr Treasury yield “Continuum” chart that shows 2022 as the year everything changed. Old macro kaput. New macro in play.
It sure does not seem like a coincidence that the S&P 500 topped out in relation to gold at that time as well.
So the theory is that due to the new macro’s heavier inflation signaling than the decades-long ‘declining yields’ continuum that ended in 2022, the stock market may not suffer the periodic deflationary liquidations it did in the 2000-2020 period, but it sure could put on a representation of the inflationary 1970s. The chart above does absolutely nothing to contradict that idea.
Why might SPX not crash, but instead go on a road to nowhere, nominally? It is a multi-sector market. Within that market there are several sectors that could benefit from the inflationary macro (like commodity/materials, Energy, related) and others that could be impaired.
Meanwhile nominal SPX (daily) resides above a bullish looking pattern wondering “why not try for the target?” RSI and MACD look coiled for it.
Meanwhile, world markets continue chugging along as well, as everyone (with the possible exception of Japan?) seems to anticipate a dovish 2026.
World/America ratio shows the world is not bowing before Trump. It’s as if the world thinks he’s a Putin/Xi knock-off. As Trump plays Putin for oil and minerals, Xi Jinping is probably readying a Taiwan takeover. Let us think about what that could do to global Semiconductor trade.
Portfolios
Gold is long-term risk management & monetary value/stability in a balanced portfolio.
Taxable account removed from weekly reports because it is extra time consuming work (especially when adding notes to the right column), and it is not a representative “investment” account (it’s as much a cash/bond oriented savings account as a stock investment account).
Roth IRA (non-taxable, no contributions)
The chart is doing its job. I’ll let it do its job until it starts to do a poor job. It must hold the combo of the trend line and support line.
Cash is 38%. Short-term Treasury/TIPs are 36%.
Positions included core gold stocks/royalties, seasonal (TSX-V related) specs in the resources areas, REE, Uranium, Gas and possibly soon, the Energy sector. I may also look to increase Healthcare and other defensive-leaning items. I have enough bull stocks, I believe.
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.
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.
