Loading ...Precious Metals (and macro discussion)
Gold is weakening and in only inching (literally) above the April high has not made a qualified higher high to April. Therefore it does qualify as a double top as well. Silver remains technically bearish on the daily time frame as do all mining indexes/ETFs.
The weekly chart of HUI held below resistance last week and so it also remains bear biased.
HUI/SPX ratio nudged below the trend line. This does not mean the stock market is bullish, but if the ratio breaks down it could be another 2008 analogy.
Here is what I mean. Note that the 2 charts are not all that similar, but the main point is that in Q4 2008 (which also happened to be the very first 3 months of NFTRH’s existence), the last table pounding ‘all-in’ BUY on gold stocks came as they were crashing while their fundamentals were improving by leaps and bounds (gold rising vs. commodities and stocks, inflation signals non-existent, yield curve rising and systemic stress all around). In that circumstance gold stocks led the SPX to the downside…
…even as gold vs. stock markets was exploding upward.
While the Gold/Silver ratio (GSR) led the whole bearish shootin’ match.
The rise in gold vs. silver came in conjunction with the deflationary rise in USD.
And so, there is a reason we follow the 2 Horsemen (GSR & USD). The US dollar has been declining since last year and the Gold/Silver ratio has more recently popped above resistance (now support, which it tested a couple of weeks ago). The USD is also at the long-noted support zone in the mid-90s.
If the 2 Horsemen ride again, it is anything but assured that they will spare stock markets this time. But over the course of the post-2008 cycle that is exactly how market participants have been trained to think, and would-be bears – myself included – can be excused for having their doubts about the stock market’s potential vulnerability.
I am going to skip the daily miner stock charts this week. We’ll show some weekly charts in the NFTRH+ Notes segment, as usual.