On March 4 we reviewed the technical reasons why the gold sector was launching as opposed to blowing off. This, after articles began appearing calling the rise to that point…
Very simply, the weekly moving average that contained silver through its bear market has been broken to the upside. That is another booster of our assertion from earlier in the…
A new subscriber had a question as to the point of yesterday’s update about the Silver-Gold ratio and so I want to try to be clearer for other newer subscribers. The statement in question was “But until the Silver-Gold ratio breaks out, it has not broken out.”
I like a party as much as the next guy, but here is a turd in the punch bowl just to make sure we are balanced and partying within bounds. The top panel is the Silver-Gold ratio (SLV-GLD) and the lower is the Commodity sector ETF.
In US pre-market silver is +2.47% and gold is +.72% at 7:00 Eastern. The silver-gold ratio closed like this yesterday, still above the daily SMA 200.
This week we abbreviated to a review of limit and/or trend change points in several markets, further discussion of inflation and what needs to be in place to call an…
Note: A reminder that I will mostly be away from the markets on Thursday and Friday. This update is an extensive review of where markets stand now. We will update the situation on Sunday with an abbreviated NFTRH 391.
Precious Metals
HUI made it to the resistance line and the projected zone of 202 to 211 off the consolidation triangle (ref. daily chart reviewed in this update last week). From the ‘bottom line’ of that update: “Watch the gold miners. A breakout (on a weekly close) here would signal a new leg to an initial target of 211.”
The Silver-Gold ratio (SGR) has been a primary indicator we have awaited for a confirmation that a phase of overt inflationary effects may get under way. This would have implications for everything from commodities to resource based economies (like many emerging markets). It is one of the ‘market-based’ inflation indicators we have discussed; a metallic “credit spread” as Bob Hoye calls it. When silver leads, price increases across many other asset classes are more likely.
On April 7 in pre-market we had an extensive update on gold, silver and especially, the miners. This update is now public for your review. If you check it out…
We do in depth analysis on a weekly basis (and every day in-week) because there is no substitute for working to be right with the market’s evolving situation as opposed to making bias or ego stoked calls in hopes of being right.
The current situation has seen some calling ‘bullish’ on the stock market despite a still intact bear trend (noted repeatedly in NFTRH), people going bullish on commodities despite their “bounce only” (also noted repeatedly) status in the absence of real, market-based inflation signals (which I do think are coming soon) and global markets bouncing within bear trends of varying degrees.
But the good feelings of the last 1.5 months have been indicated as a counter-trend bounce to reset the unsustainable bearishness of January and February’s downside, although the bounce has come very close to the point where it could negate the bear trend. As yet, it has not.
In the weekend report we used weekly charts to show that gold has taken a good chunk of its apparent price risk out as key support was not too far away beginning in the 1180’s. Silver had lost the breakout above the would-be supportive EMA 55 and HUI was well above key support, now 140 (lateral support at October highs) to 148 (gently rising EMA 55). We have also been noting 211 as the point that greatly improves the prospects of a bull market, technically (I think the probabilities are that one is in progress, but the technicals are what they are).
Because I want to look around as many corners as possible (without donning the tin foil hat), I had a thought that is at odds with the view that the bear phase will resume/continue. It is also at odds with a bullish view of gold for the near-term.
So please consider it a mental exercise, the likes of which can be healthy if we keep these things in perspective and in their proper place in the probabilities tool box.
Today I did something I rarely do and listened to nearly the entire Yellen speech. The reason I usually don’t listen to these things is because I don’t want to get caught in a mental whipsaw if markets start reacting to the jawbone du jour. But considering that in March alone the FOMC meeting (ultra dovish) and the subsequent clown show (hawks in drag paraded out just a week later) I felt that I needed some signals from Yellen.
We have been looking for the pullback to reach the 1180’s using the weekly chart and it’s EMA 75. Gold has reached the more general shaded support zone.