We have been watching for an end to the correction in the complex, as would be led by silver. So let’s update silver’s status (as it gets hammered this morning), gold, the Silver/Gold ratio and GDX to update the view as of this morning, in pre-market.
We knew there would be volatility, and here it is. The orange (would-be) support bar is getting impaled for a test of the 50 day moving average. Volatile and normal. It is disappointing to see the April 17th high lost, but the fact is that the silver price took it out already. It could be a bull trap failure. It could also be a scout for the future. Silver has dropped to a very key decision point at the convergence of the SMA 50 and the white neckline. RSI is still in a structure where it could be seen as climbing upward, and MACD is positive.
Gold continues to look technically suspect, as we’ve been noting. That is defined by its inability to take out the SMA 50. Instead, it continues to droop below it. RSI sucks and MACD is negative.
Yet the Silver/Gold ratio is taking a drubbing. This owes to silver’s volatility, to the upside and downside, vs. gold’s more stable price action. Here are the parameters again, from yesterday’s update:
Well, it’s less comfortable, but still intact. Also from that update:
I will personally not plan to ride a failure of option 1 above without taking action beyond my ongoing sell here, buy there mode (talking broadly, not just the miners).
I had no choice, as is the case with pre-market moves. I am ready to take action, but also plan to evaluate today before getting too jumpy. There are profits to protect, but there is a little greed in there as well. Greed that does not want to get too easily shaken out.
So silver is the would-be guide out of the precious metals correction. Would-be, not will-be. I am very interested now in nominal silver’s dealing with the 50 day average and the SGR’s dealing with option #2.
Meanwhile, GDX is implying an open at the first support zone at 90 (+/-). There is a gap below at 87.70. It is likely to fill, barring some sort of wondrous turnaround today.
GDX/Gold ratio is slated to open back down into the nose of the triangle for a test of the converging moving averages. It’s intact. Recall also from yesterday’s update (linked above) the suspect look of the GDX Advance/Decline line. It’s a factor.
This is not a compelling picture of sector internal breadth either. At least for the short-term. The 2025 trend shows healthy internals. Until GDX A/D turns up, we have a caution to not be too bullish for a new bull market leg, in my opinion.
Bottom Line
The pullback has dropped the Silver/Gold ratio, our guide for a forward precious metals and commodity rally, to Option #2, which is not the most comfortable level, but is normal (and volatile).
Silver and its ratio to gold must hold the equivalent of that area or things will get dicey.
With all that is going on with our fine president and his global adventurism, the machines have gone wild. Frankly, I am not sure how I have managed to increase my account through all of this (the focus on Semi didn’t hurt, I guess), but now the key, speaking personally, is to try to balance a bit of patience with the above parameters against my desire to lock in more profits and manage risk. Talking about the whole broad market, not just precious metals and commodities.
Personal note: I will be away from the markets on Monday, as my kid’s debut film is being premiered in NYC. So that is a happy thing. However, it makes my personal decisions today more important. I have presented parameters to the best of my ability. So as not to risk whipsawing readers, I am not going to robotically list what, if any, moves I make in the Notes. I sense that I’ll manage risk to some degree. But again, the situation is still intact.
