Loading ...The Gold/Silver Ratio is dropping hard
Gold in Euros has broken out to all-time highs. Silver is surging, and the Dollar is yet to burst out of the dome (it may well do that to make a final high for this cycle – I’m not worried wrt gold). It’s starting to feel like $1800 gold could arrive quickly.
Balanced precisely on key support. Never ceases to amaze me how this stuff works. A slight move down from here could result in a large gap down like it did in the past. No room for manoeuvre. So what’s it going to be ?
Update – We have broken down, as gold edges up and silver rises faster. HUGELY IMPORTANT.
Edit: USDU chart added…
Just something to keep an eye on. I love Rambus work, and he’s probably right. I just can’t shake that Dollar bearish feeling though. All will become clear in time I guess.
So far, the answer has to be yes (at least since 2001). Since that time gold has demonstrated one perfect parabolic run (2001-2011). The move since early 2016 is also showing every sign of conforming to a parabolic curve. The entire period may also be contained within an overall parabolic curve (shown in red). On a linear chart, a parabolic move shows up as a curved trajectory trending towards a vertical rise (infinity). On a log chart, a parabolic move will show itself as a perfectly straight line trending from lower left to upper right. In that sense, when looking at longer term price projections, support and resistance levels etc, it makes more sense (if you’re drawing straight lines) to do it on the log chart. Why ? Because the evidence supports the idea that gold price is continuing to behave in a logarithmic fashion.
Interesting to see what happens next week – will support hold ? A more significant pullback will happen at some point, but not necessarily yet.
I’ve zoomed in on it for you. I haven’t touched it at all. It looks like 99.25 would be the upper limit before a breakout of the dome happens…
Small consolidation or a $200 correction ?
GSR could breakdown courtesy of gold falling more than silver in percentage terms.
The bull flag failed, so I’m keeping an eye on the supporting moving average now.
Decision time…
… someone ?
Edit: That jinxed it ! Cup/handle failed and back in the flag for now.
I don’t often post charts of individual stocks, for fear of people taking it as a recommendation. I would prefer people do their own research etc. If asked, I always suggest a selection taken from the HUI, GDX and GDXJ indices. Anyway, this one that I hold, and these are the sorts of ‘doodles’ I make prior to buying/selling. Just thought it might be useful to someone, somewhere lol.
I’ve been doing some analysis based on the Gold/Silver ratio past breakdowns and corresponding performance of Gold/Silver/Miners. The move down in the GSR from May 2003 (which I think is most comparable to now), resulted in Gold rising 20%, Silver surging 75% and the miners gaining 80%. From the GSR top in July, that would project gold to $1560, Silver to just over $25 and the HUI to just below 400. We’re already close to $1560 gold, and I’m aware that the ‘reverse symmetry’ move would take us to $1800 quickly. If that were to happen, I’d expect a large and rapid pullback. In summary, if the GSR confirms a breakdown in the 82 area, we can expect silver and the miners to fly.
The December 2008 to November 2010 period (GSR peak to the ‘green zone’) saw much bigger gains in Gold/Silver/Miners, but that was the parabolic rise to the 2016 top. I expect that kind of price action from the 2024 low, to the high in the late 2020’s/early 2030’s.
It doesn’t bother me though, because I’m holding for much bigger long term gains. If you zoom out, the bigger picture comes into view…
It may be unlikely, but if that ‘reverse symmetry’ thing plays out in full, we would just carry on all the way to $1800.
Well, I’m about to sign off for the day. Just a final thought…
What next ?
On a long timescale, the various indicators move very slowly and give good buy signals for the start of a bull market when they all line up. I’m going to be watching moving averages very closely now, to gauge if our bull market is fit and healthy.
Here’s a reminder of how the HUI chart is shaping up…
Are we ready ? To extend 30-40% above our supporting moving averages (as is common in a bull market breakout), I believe one of the first signs at the game is on, will come from this chart…
This is going to be an interesting week. Goodnight from the UK…
Across on my Twitter account I’ve been accused of misleading people by saying that the COT numbers are nothing to be scared of. I’m putting a detailed response on here, and I’ll direct them to read it. Somehow I’ve managed to get over 3500 followers in a few months, so I hope it increases awareness of our community here. The limited number of characters on Twitter makes it hard to respond in full. The chart I’ve posted here should make my point pretty well. It boils down to the simple fact (at least, I think it’s simple), that all the chart indicators need to be viewed differently, depending on whether you have a market trending up, down or sideways. The same applies to COT numbers.
I like to keep things simple, it hurts my brain less. For the purposes of this article, forget what you call the lines at the bottom of the gold chart (STOCH, large spec, commercial, whatever), it really doesn’t matter. It’s green lines, blue lines and red lines. Right then. In a bull market, the green line going down from a high reading is NOT a problem. You just get a bullish consolidation followed by new highs. In a bear market, it is a problem – of course it is – it’s a bear market after all (the clue is in the name). I’m being flippant, sorry. Anyway, back to the chart – the blue/red lines at the very bottom – if they are above 50 and dipping down from high values, it’s not a problem. If price has crossed below the moving average (red circle) and we are below 50, it is a problem.
So what am I trying to say ? Well if you’re trying to trade in and out of this market on daily/weekly timescales, then go for it – use the elevated indicators and COT numbers to keep calling for a big drop in price, but just remember that in a bull market, price may rise $200 in the meantime, then only drop $100 whilst the indicators and COT numbers ‘reset’. That’s how a bull market works. If it didn’t do that it wouldn’t be a bull market.
I don’t want to mislead anyone, so I apologise if somehow I have. My tactic (for what it’s worth) is to hold on for dear life and keep an eye on the 2023/24 cyclical low, expecting to see some signs that a consolidation turns into something deeper which violates the supporting averages at the time. I plan to exit ALL my PM miner positions at that point and get in at lower valuations when the 2023/24 low is in (safely in the knowledge) that the biggest part of the bull run into a peak in the late 2020’s ahead of the next major 16 year cycle low in 2032. That’s the plan anyway. I would advise everyone to take advice from multiple sources and read articles and posts from people who have completely the opposite view to yourself – it can be very enlightening. Open minds and lots of collective team work is what this site excels at. Less of the confrontation, plenty of friendly ‘banter’. The world just got a lot more screwed up in the last few days, and the coming years look, well, I’m not sure what the word is…crazy/tumultuous/dangerous/turbulent/challenging/volatile/just plain shit. The charts are starting to point to something not very nice. Global all-time highs in gold are coming at a price. I think we need to be careful what we wish for here. Wishing all here the very best for the future.
