For anyone interested, the CoT data improved again, although silver is not yet near the level that put in the June bottom. This could best be termed a sentiment indicator I guess. Other sentiment indicators are contrarian bullish. Yet certain macro fundamentals are not. I would welcome a final event to clear the contradictions, croak the bottom callers and finally set things up for a rally or bull market.
Everybody’s afraid of the dreaded ‘taper’ and that may be just what is needed to get the inflationists out of the gold market (come on FOMC, don’t roll over on us again). They are absolutely obsessed with the money printing aspect of QE and yet not looking at yield relationships and ZIRP.
Gold and silver CoT data improved for the second week in a row.
It has been 2 years of chop, grind and drop in the gold sector. 2 years since my lousy projection on HUI’s monthly chart failed to do what the Russell 2000 still has a chance to do; measure the ‘Cup’ to an upside target.
At least that is the message this monthly chart of silver wants to convey.
Silver monthly, from NFTRH 263
Gold Ratios: Gold vs. oil, silver (inverted), commodities and stock market…
First of all the silver gold ratio is sneaky because it is a ratio and thus, hidden beneath the surface of things. It is also sneaky because all it has done during this June low retest in the precious metals is consolidate… sneakily. It has not broken down and indeed is hanging around the 200 day averages again. They say the more times resistance is tested the weaker it becomes. Also, that’s a pretty MACD to a watchful geek.
A view of the metals by daily chart.
- SLV is above the 50 day averages. Next objective would be to break the trend line. There is some volume creeping in, which is good.
- GLD looks like a bear flag, but we’ll see. A rise above the 50 day averages and trend line would argue otherwise.
- The SLV-GLD ratio (a leading indicator) has popped upward to the trend line.
But the problem is those trend lines. Another problem is that the precious metals may be one happy government resolution away from another drop. We just do not know.
If they are getting the ‘fear’ bid today, they will probably get the ‘relief’ dump if and when these people in Washington decide to end the grandstanding and do what they usually do, choose more debt. At least that is what has happened routinely over the last year when news comes that is perceived by the majority to benefit the economy.
I have laid out some parameters to the upside and downside while trying not to manage you into the ground. If you have any questions, just pop me a mail.