In the last eLetter on July 14th we pointed out why the CoTs for gold and silver were not necessarily to be feared despite the extended readings. We highlighted the bullish HUI/Gold ratio, the bullish charts of gold and HUI, and the very constructive state of silver, including this…

“As you can see, silver has rallied just a bit and the CoT have shown increasing spec longs and commercial shorts. All normal. I think it is a positive that silver has been muted in price and in CoT relative to gold. It’s almost as if its in the weeds, laying in wait. And those of us who’ve been around a while know that’s not usually its M.O.”

Silver lays in wait no more. Our bullish stance on not only the gold miners, but silver itself has been rewarded as the expected catch-up move in Silver/Gold manifested last week. On Friday per a post at the website I unloaded a position in SLV that was initiated back at the May lows. Enough was enough and profit needed to be taken somewhere (silver miner positions were held).

Silver (SLV) is Two Things… (July 19)

The day before however, a detailed public post showed why the big picture for the precious metals – and especially the gold miners and likely, silver, is so very positive even within the conservative view put forth in that article. Frankly, I’ve rarely seen such a setup. But then again the gold miners and silver have rarely hit such under valued readings (refer again to last week’s eLetter to review those details). Silver is under valued relative to gold and the miners are under valued relative to gold and relative to their own fundamentals. The best part is that even if this is merely an A-B-C upward correction HUI could still have another 70% upside and many of the miners we track, much more.

Precious Metals Big Picture, as Silver Gets on its Horse (July 18)

So the Silver/Gold ratio zoomed through the daily SMA 50, but halted at the SMA 200. Again, enough was enough for one week. The major trend, which I do give a decent shot at changing in the coming weeks or months, is still down. As such, a broader inflation trade is not yet definitively indicated.

I was a little disappointed to see the difference in popularity between a bullish silver tweet I made on Friday and a tweet in which I’d noted the sale of SLV (a current long position, SVM was used as the silver miner example in this case). That may not be a lot of likes and retweets for some, but they are more than I’ve ever received by a long shot. This tweet’s message is clear, however. It’s a launch, not a phase-ending blow off.

A subsequent tweet noting the SLV sale barely registered although one noting the contrary dynamics in play at least had a pulse.

Bottom Line

Sure, people are flying into the story now. That very fact makes silver and the precious metals vulnerable to near-term volatility. My personal tack is to take some profit but to keep my eye on the big picture, which is flat out bullish now… and I am not even talking major new bull market, as some are currently. That’s putting the cart before the bullish horse.

Silver may have signaled a time of coming volatility but it also made a higher high and thus established an uptrend. Within a conservative view, we have HUI and silver out performing gold and even gold itself going to the high 1500s. Do check out the Precious Metals Big Picture post linked about for the ultimate targets. Meanwhile, the sector is fun again and we charted a bunch of miners in NFTRH 561 this weekend and the big picture view allows us to sit back and manage the volatility in a rational and profitable way going forward.