The gold to silver ratio is one of key precious metals metrics to watch. Sometimes, the yellow metals outperforms the white one, and vice versa. How is the relative value of both metals measured against each other doing currently?

The gold to silver ratio based on spot prices moved back up, after verifying the breakout above the 100 level. The spot-price-based ratio is currently trading above 101.

The pre-market silver move is particularly interesting, as silver's tops are often most clear due to their shape - it's quite often a big, clear spike.

The above 4-hour chart shows that silver just reversed once again. The previous reversal was quickly followed by even higher silver prices, so it's too early to open the champagne and claim that the top is definitely in, but given silver's recent clear outperformance of gold and the verification of the breakout above the 100 in the gold to silver ratio, the above seems quite likely.

Once silver futures break below the $17.17 level (the most recent low), it will be almost crystal-clear that the top is in. The next very short-term target area for silver is between $16.30 and $15.80. Then, after a brief pause, we would expect the decline to continue.

The HUI Index invalidated the breakout above the 300 level, but it didn't invalidate the breakout above the 2016 high (286.05) just yet. Once it does that, the bearish picture will become even more bearish.

Ideally, we would like to see the HUI Index close below the highest weekly close of 2016 - 278.61.

If the stock market slides here, the above-mentioned invalidation of the breakout above the 2016 highs will be almost inevitable.

But will they slide?

While we get into details in our Stock Trading Alerts (and Stock Pick Updates when it comes to individual stock selection), we can quickly say that stocks are currently in a make-or-break situation.

They closed the price gap yesterday and they declined in today's pre-market trading. Depending on the next short-term move in the stock market, we will see either a decisive breakout above the above-mentioned price gap and the 61.8% Fibonacci retracement level, or invalidation of the move above it and likely another sizable downswing.

In my opinion, as long as the breakout above the upper border of the price gap is not confirmed, another move lower in stocks is quite likely.

Before summarizing, we've been asked about the increase in volume of the DUST ETF in the last several days, and whether it means anything. In short, it most likely doesn't. Volume details are provided in terms of numbers of shares, not in terms of their value. As the price of DUST declined, the same amount of dollars means that more shares are going to be traded. For instance, the value of the NUGT or GDX didn't change that much recently on a relative basis, so it doesn't really confirm anything special as far as the price-volume analysis is concerned.

Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold & Silver Trading Alert. It also covers the stock market prospects as they go influencing the miners. They say that the partially informed investor is just as effective as partially trained surgeon... You might want to read the full version of our analysis before making any investment decisions.

Subscribe at a discount today and read today's issue ASAP.

Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager

• Read more

To be bullish or not to be - that is the question. Or it might have been the question, if someone named Shakespeare wrote a piece titled Investhamlet.

The choice whether to be bullish or bearish or neutral on a given asset should be made each day, each time based on the information that is currently available. Let's check the new signs that we saw yesterday.

First of all, we just saw a bearish sign from the general stocks market.

The Sign from Stocks

The huge price gap that we saw on Monday seems very encouraging, but please keep in mind that the S&P 500 once again failed to close the bearish price gap that it had opened in the first half of March. So, should one trust Monday's bullish price gap? It seems too early in our view. The above-mentioned resistance is strengthened by the late-April high, and the S&P 500 futures moved lower yesterday.

And by "moved lower yesterday" we actually mean, they reversed in a way that's quite profound in case of the S&P 500 futures.

The shooting star candlestick in the stock market futures points to a change in the trend, especially since stocks invalidated the tiny breakout above the late-April high and the 61.8% Fibonacci retracement level.

Also, please note the increase in volume on the previous chart - we saw the same thing at two April highs. Perhaps we're seeing yet another high, instead of a beginning of a new upswing. We shall know soon enough - stocks are trading between the price gaps and they are likely to break out or break down sooner rather than later.

The implications for silver and mining stocks - which are more connected with the general stock market than gold is - are bearish.

While stocks reversed, the USD Index moved lower once again.

The USDX Bidding Its Time

The USDX moved below its 50-day moving average (marked with blue) and it closed there for the second day. That's important, because that's USD's fourth attempt to break below this moving average and confirm the breakdown. The first two attempts took place in late March and in early April, and the breakdowns were invalidated on the next trading day in both cases. The third attempt took place about 3 weeks ago, and this time the breakdown was invalidated on the third day.

Will this time be different and the breakdown below the 50-day MA gets confirmed? We doubt it. The history repeats itself, after all, and a given pattern remains in place until it is clearly broken. This time, it seems that the USD Index will reverse once again, especially given its long-term breakout. The latter is likely to make the USD Index move much higher in the following months (possibly years), not only weeks. This doesn't mean that we expect gold to decline in the long run, though. We think that a quicker 1-3-week-long decline is in the cards, but nothing more. It's likely to be significant, though.

The implications of the most recent developments in the USD Index are bearish for the precious metals market.

As you can see in the lower part of the above chart, gold moved higher yesterday, but it moved up rather insignificantly. Gold futures were up by precisely $11.20, which means that they didn't erase Monday's decline.

Meanwhile in Precious Metals

Gold's unwillingness to react to USD's bullish lead can be viewed as bearish. The same goes for the sell signal from the Stochastic indicator. These signals that took place after Stochastic was close to the 80 level, were followed by quite visible declines in gold.

Consequently, the implications of yesterday's session - and this week's developments in gold - are bearish.

Then there's silver that's soaring like there's no tomorrow and miners that just confirmed their breakout above the previous May highs.

Silver moved higher right after forming the daily reversal and it even moved above the intraday high earlier today. Silver is clearly outperforming gold. In case of the gold to silver ratio that's based on futures, we saw a move slightly below 100, and in case of the ratio based on the spot prices, the ratio just touched the 100 level a few hours ago, and then it moved back up.

On one hand, the breakout above the 100 level in the gold to silver ratio seems to have been just verified, and it's bullish.

On the other hand, silver reversed slightly above $18, which doesn't correspond to a major resistance level. This means that the white metal could still move higher before topping. There are several resistance levels visible on the previous silver chart - between about $18,50 and about $20. Will silver really move as high shortly?

If the USD Index is bottoming and the general stock market is topping, then the above is very doubtful. In fact, silver's relative strength on its own makes the short-term picture for the precious metals market rather bearish, because silver usually plays major catch-ups with gold in the final part of the rally. It definitely happened already and the extent to which silver outperformed gold, was clear and loud. Consequently, the top might already be in after all, as the 100 level in the gold to silver ratio is more important than any of the above-market individual silver resistance levels.

This leaves us with the bullish implications of yesterday's move in the mining stocks.

There are two possibilities at this moment. Either the GDX ETF is breaking substantially higher here... Or it's providing us with fake strength at the very end of the move.

Yes, the link between gold and gold miners is not as straightforward as it seems at first sight. On average, miners do tend to be weak sooner than gold during its rallies. However, there's also this very final part of the upswing, in which miners fake their strength. Let's take a closer look at this phenomenon. The chart below features gold and the HUI Index - proxy for gold stocks.

The above-mentioned link works both ways. That's how the 2015/2016 decline ended. Miners underperformed in the first days of January and this was a fake move. That's also how the February-March decline started - with gold miners' outperformance. And that's how many other moves in gold and gold miners have ended.

The black rectangles show periods when gold miners refused to fully follow gold's lead, and the red rectangles show when gold miners temporarily multiplied gold's signals.

So, is miners' "strength" really "strength" to the full extent of this word's definition? Given all the other points made today, this still seems doubtful.

Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold & Silver Trading Alert. It also cover the stock market prospects as they go influencing the miners. They say that the partially informed investor is just as effective as partially trained surgeon... You might want to read the full version of our analysis before making any investment decisions.

Subscribe at a discount today and read today's issue ASAP.

Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager

• Read more

Gold moved higher yesterday... For a while. Then, it reversed and closed over $20 lower, creating a profound shooting star candlestick. These candlesticks should be confirmed by high volume and that's exactly what we saw. Gold reversed on volume that was highest since late March.

All that happened while silver reversed (also on volume that was highest since late March) and miners declined. Interestingly, silver was still up during the day, while gold and miners were down.

Silver once again outperformed, while miners lagged. Gold and silver both reversed profoundly and on relatively big volume.

Is there any topping confirmation that we are actually not seeing right now?

Even the link between gold and the USD Index seems to confirm gold's top. The two charts from the bottom are the USD Index and the GLD ETF. We included the GLD ETF for two reasons.

The first reason is to make it easier to compare gold and USD (these charts are next to each other), and the second reason is to show you that, in a way, gold just moved to new highs and then declined once again anyway. The latter is important in case one wants to view the recent triangle in gold as the fourth of the Elliott Waves. The move to new highs could be the tiny fifth wave. We haven't seen it in gold futures prices, but we did see it in the GLD ETF.

Back in March, GLD topped when it declined at USD's bottom, during its intraday decline, and it happened slightly above the previous yearly high. If the USD Index just bottomed yesterday, it means that the situation is very similar.

The performance of either silver or the miners is different, which is likely linked to the relatively strong performance of the general stock market in the recent days. Relatively - meaning compared to what we saw in March.

Look out as the bearish case for the short term just got stronger.

Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold & Silver Trading Alert. It also cover the stock market prospects as they go influencing the miners. They say that the partially informed investor is just as effective as partially trained surgeon... You might want to read the full version of our analysis before making any investment decisions.

Subscribe at a discount today and read today's issue ASAP.

Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager

• Read more

Whenever one hears the words precious metals, gold and silver spring to mind. But this world is much richer, and precious metals don't end with the yellow or white metal. The less well known cousins, platinum and palladium, can and do send valuable signals too. Before we examine silver, let's take a look at something interesting in palladium.

The interesting detail is palladium's weakness. This precious metal was the one that soared most profoundly in the past few years and while it recovered some of its 2020 declines recently, it appears to be back in the bearish mode as its unable to keep gained ground, even despite the move higher in the general stock market.

The previous leader is now definitely lagging. And you know what was leading? The previous laggard - gold stocks. And you know what is leading now? Silver - as it usually does in the final part of the upswing. The HUI Index is marked with brown in the bottom part of the chart. When leaders are lagging, and laggards are leading, one should recognize that the market is topping - and that's the key take-away from the palladium and platinum analysis right now.

Palladium was the leader and platinum was actually one of the laggards. Palladium was down by 0.43 last week. And what did platinum do?

Platinum rallied by 3.52% last week.

The big rally in platinum to palladium ratio is yet another sign from the relative valuations analysis pointing to a nearby top in the precious metals sector.

Having said that, let's take a look at silver's forecast. In case of the white metal, its ratio to gold might be more important at this time than price itself.

The silver futures are trading at $17.73, and gold futures are trading at $1,773, which means that in case of the futures market, the gold to silver ratio has just moved to the 100 level.

Earlier this year, the gold to silver ratio had broken above the very long-term and critical resistance of 100. Is it really that surprising that silver is verifying the breakout by moving back to the previously broken level? It's not.

The key ratio for the precious metals market has just moved back to the previously broken resistance level and it's verifying it as support. This is relatively normal that after a breakout, the price or ratio moves to the previously broken level.

Yes, on a short-term basis, and looking at silver chart alone, the breakout above the April highs and a quick move to the early-March highs was a clearly bullish phenomenon. However, this ignores the fact that silver is known for its fakeouts (fake breakouts) and that looking at its relative performance to gold has been more useful (and profitable) than looking at its individual technical developments, especially if they were not confirmed by analogous moves in gold.

Consequently, we view the current action in silver as bearish, not bullish, especially since the gold to silver ratio moved back to the very strong support level (100), which likely means that silver's strength relative to gold is over, at least for some time.

Thank you for reading today's free analysis. Please note that it's just a small fraction of today's full Gold & Silver Trading Alert. It also includes the fundamental analysis of the Great Lockdown with the emphasis on the dramatic changes on the US jobs market, as well as technical discussion of silver, mining stocks, USD Index, platinum, and palladium. They say that the partially informed investor is just as effective as partially trained surgeon... You might want to read the full version of our analysis before making any investment decisions.

Subscribe at a discount today and read today's issue ASAP.

Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager

• Read more

The greenback isn't the only currency that precious metals' investors need to consider. As we just received a request to include the yellow metal analysis in terms of the euro, we deliver.

Gold priced in the euro moved above its February high and verified this breakout by bouncing from it twice. Still it lost its momentum and broke below the rising support line (and then verified this breakdown by moving back to the rising line and verifying it as resistance).

Will this breakout hold? We doubt it. Please note that gold price in terms of the euro declined profoundly in March, when gold declined in the USD terms. Why? Because gold declined more than the USD Index rallied. The history tends to rhyme, so it's likely to do it again.

And it is not only analogy to March that suggests so, it's also the way gold finished the previous bear market before staring the long-term bull market.

When the USD Index soared in 1997, gold declined heavily from both: US and European point of view. Of course, the decline took years back then, but the overall shape of the relationship was similar.

The analogies to both previous situations, the very recent one and the more distant one point to the same conclusion. If the USD Index soars in the following weeks, gold is likely to decline - also in terms of the euro. And the USD Index is likely to soar in the following weeks. Guess what that means for precious metals.

In the full version of the analysis, we also feature our preferred way of taking advantage of the current situation and the analogies to the previous price moves.

Subscribe at a discount today and read today's issue ASAP.

Sincerely,
Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager

• Read more