The stock market vs Gold (SPY-GLD) has dropped over the last 3 days. It is now at a point where it will either bounce (middle of Bollinger Bands, 50 day MA’s) or continue on making last week a lower high with a date for a lower low to March. That would be a… anyone? Downtrend. Me, I’m going to let the charts decide here as I am all around. It’s not a time to try to be controlling the market. It’s a time to let it show its hand.
Gold: Goons cover shorts, get less long. Large spec’s sell and get short. That means another incremental improvement this week.
The 10 vs. 2 year yield spread dropped, which was an in-day negative not to be given undue weight based on one day, but to be respected none the less. Interestingly, the sector went nowhere (GDX) to down (GDXJ, gold, silver) yesterday as the spread popped. Today spread down, sector up.
Well, let’s just say that the baby trend continues in silver vs gold…
If silver takes leadership in the precious metals well, you know how that goes. I have bought, held and added to a silver bullion fund over the last few weeks and it has not been fun. But I did not think of selling it because silver has not broken critical support and the ratio above appears to be holding support as well.
The gold sector is peopled by a high concentration of contrary indicators because it is a relatively (to the vast world of equities and bonds) small market that offers refuge from some of the damaging aspects of the spectrum of investment products that are supported by the manipulation of interest rates and printed (and digitally created) money supplies. Thus, gold has moral high ground if an asset can be thought to have morality.
Guest Post by Steve Saville
 Horning in a little on Steve’s post, the chart below was included in an NFTRH update on March 14, with this observation:
“While the GSR [gold-silver ratio] and HUI have indeed spent most of their time in negative correlation, the launch phase of the bull market (2000-2003) was different.”
Also, recall this public post yesterday: Silver-Gold Ratio, Bottom Retest Completing? Bottom line, Steve Saville’s views are in line with my own regarding the gold/silver relationship.
Gold vs Silver
We most recently discussed the long-term performance of the gold/silver ratio only two months ago, but the subject is sufficiently important to warrant some repetition. So, without further ado and with reference to the following monthly chart, here are the main points we made in our 4th February commentary:
Putting in a real bottom (one that a major bull move can generate from) is not easy. A subscriber just passed along a view of the Hulbert HGNSI showing that plucky gold newsletter writers got way over bullish right around the Ukraine hype period. They and their cheer leading are their own worst enemy.
But here is a view of something that has been going on since August that I think could be very relevant. Silver has been declining vs. gold in search of a retest of last summer’s lows for the Silver Gold ratio (SGR). This has gone hand in hand with the big, grinding bottoming process in the precious metals stocks sector.