To this point, the expected bottom and rise in the Gold/Silver ratio, dragging USD up with it, has pressured the precious metals and many aspects of the commodity sphere, as also expected.
However, it is time to take a close look at the situation with respect to the anticipated bounce in the precious metals complex, which is already in progress.
GDX is at 104 and we have an upside target of 108 to 110. As noted previously, it busted back up into its bear flag, which means it wasn’t a bear flag at all.
Importantly and internally, GDX is leading gold in fine fashion. We have anticipated a strong earnings season and that is undoubtedly playing into this. Gold mining fundamentals have been stellar over the last year.
Silver is an important sector leader and item to watch, as it tries to creep out of a symmetrical triangle. But it also lurks below its 50 day moving average. As a side note, this chart does not show volume, but SLV’s volume profile is very tepid. There is no conviction due to building volume at this time. Break out and start moving up and you know that would change as the usual speculative momos fly back in.
Bottom Line: Watch silver for sector leadership. It did great downside work in making a 62% Fib from the April, 2025 low. An upside break would likely see gold rise and the gold miners at least hit GDX 108-110, if not higher. However, the odds remain that silver and the complex have generally put in their highs for the cycle (individual stocks would be driven by quarterly performance, drilling news, acquisitions, etc.).
The Gold/Silver ratio dinged 72.63 on Feb 6th, reversed downward into a second bull flag, which then did its thing and broke upward. However, including this morning we now have 3 red candles in a row after not making a higher high. It is possible that reversal point could be as good (or as bad for precious metals and commodities) as it gets in the short-term. A decline in the GSR would work well with a bounce in the sector.
For his part, Uncle Buck has had a decent little bounce but is back to a resistance point at the converged and downtrending 50 and 200 day moving averages. Let’s see if the GSR guides USD to pull back as it previously guided it to bounce.
Iye Gary, if GDX break thru 110 what is your level to consider a resume of the bull instead of a bonce
Hi Jonhny, any level above the previous high would do it if is not false breakout and can make a weekly close. That would get me strongly considering “correction over” with my longer timeline rendered incorrect.
Tanks , excuse my ortograph I am french canadian