I have favored a resumed precious metals correction after a short-term bounce. But I am never afraid to be wrong. Well, I don’t like it. But I’m never afraid to admit it. There’s this thing called integrity, and I want to keep mine in a sea of promotional Fausts floating around out there.
I was in a discussion with a friend, Joe, who sees through his cycles a 2016-like move in the precious metals, led by Silver. What I see is the precious metals, and especially silver, making a little hint about getting back to positive correlation with the bullish stock market. Recall that is one thing we have been watching for, to either confirm or disqualify.
With the inflationary fears currently permeating the markets, it would be logical for silver to lead gold (assuming the PMs are to break their ongoing correction sooner than anticipated and at higher levels than anticipated).
As we know, a market can and often will do what it is going to do, despite logical fundamental analysis. Again we look to Q1, 2016, when the PMs bottomed, silver took over and led gold, gold stocks and ultimately commodities and the stock market upward. At that time we noted that price (bullish) is one thing, fundamentals (which by May began degrading rapidly due to inflation and gold’s easing ratios to commodities and stocks) were quite another.
Hence my assertion over the last few months that gold stocks have entered the phase of “nothing special, at best” and why I have diversified significantly. Recall mid-2016, August I believe, when the PMs blew out and took the first long bear phase (a 2yr correction) of their new bull market.
So, nothing has changed other than I am on watch as to whether we end the current correction sooner than expected. Watch silver. It has long-since banged the 62% Fibonacci retrace level and then tested it again with a lower low. Enough good technical work has been done.
Now if silver takes out the (blue) SMA 50 and the April 17th high of 83.06 we would shift to bull now from bull later.
As an FYI, the Silver/Gold ratio has taken on a decent look as well.
“Watch silver” was the key back in 2025 as we anticipated its leadership of a big bull move not only in silver and the precious metals, but across many commodities and some stock markets/sectors as well.
Let’s just say I am not necessarily expecting to be reestablishing my short hedges any time soon. But let’s let the markets decide.
Thank you for the update, Gary. Does the Silver daily chart show it’s forming a reverse head and shoulder pattern ?
It’s possible, SB. But it’s far from well formed or confirmed at this point. If it is, the theoretical neckline would break with a break of the 50 day average. See the edited chart in NFTRH 913 that I’ve replaced the original with (adding a neckline). Of note, it would be a downward sloping neckline and potentially limit the upside measurement if indeed this is an IHS.