We just saw a specific divergence on the precious metals market. Part thereof – silver – visibly rallied, while the key proxy for gold stocks – another important part of the PM sector – HUI Index, was up by a mere 0.12%. Investors wanting to check what’s really going on are looking at gold for guidance. They aren’t getting any, as gold didn’t really change (which seems bearish compared to silver’s rally), but at the same time, it’s above the declining trend channel, which may appear bullish. What should one make of all this?

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Gold, silver, and mining stocks moved higher once again yesterday and the former even managed to move above the declining trend channel. Breakouts are bullish and thus the outlook for gold improved significantly… Or did it? Gold’s price in terms of the euro and gold’s relative performance to silver and mining stocks make replying to the above question quite easy. Looking at the relative price moves on a day-to-date basis doesn’t provide any interesting implications, but who says that it’s the only way in which one can examine them?

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In yesterday’s alert, we elaborated on how boring the situation in the precious metals market has been and what implications it has going forward, especially in tune with the True Seasonal tendencies. Yesterday’s performance in the precious metals market serves as a perfect confirmation of what we wrote yesterday, and the details of the session allows us to make even more specific prediction. There was a specific sign in the mining stocks that’s practically invisible to those, whose analysis of the sector doesn’t extend beyond looking at the GDX ETF.

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Gold moved lower in May and it’s also down in June, but the price action is far from being spectacular. The overall volatility is still very low and the situation in the precious metals sector is simply extremely boring. But with May now being over and with a new month, new factors are likely to come into play and the odds are that this month will be anything but boring. Especially, if we see the continuation in the analogy that practically nobody seems to realize.

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The USD Index moved a bit lower yesterday, and the precious metals sector reacted by… moving lower as well, which likely caught many gold investors by surprise. Not us. Gold and USD are doing exactly what seemed likely at this time and it has implications for the following days as well. In addition to discussing the above, today's alert includes an in-depth analysis of the little-known relationship between gold and the Japanese stock market. There's more than one signal coming from this analysis and all of them seem important at this time.

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