I know the structure of the market was entirely different back in 2010 (silver was in a well established  bull market with long term MAs in bullish alignment), but I think there are some similarities today with the action in gold, silver and the miners during 2010.

Specifically, after peaking in December 2009, $silver and the silver miners started to underperform gold in that they were unable to make higher highs despite $gold continuing to do so into June 2010.  In fact, during June 2010, some silver miners like AXU were near their 200 DMAs while $gold was hitting a cycle peak well above its 200 and 50 dmas. Basically things were completely out of synch.  $silver and the silver miners did not “re-synch” with $gold until $gold had completed its correction, which lasted a scant 5 weeks.  Silver miners like AXU, which had already sold off to near their 200 dmas, didn’t really go much lower during $gold’s correction (gold miners which had performed well, however, fell much more than silver miners).

It’s possible we are seeing the same thing now, with many of the silver miners (e.g., AXU, AG, USAS etc.) at or near their 200 dmas while $gold is in nosebleed territory.  If the analogy holds up, these silver miners shouldn’t dip too much farther as $gold corrects, i.e. they will positively diverge from $gold and gold miners.

I do not know if this analogy will hold, but it’s at least a bullish spin on the recent dramatic underperformance in the miners, especially the silver miners.  This theory could look very dumb by next week if the silver miners either take off higher or sell off in a waterfall decline.  Remember I would expect the silver miners to basically stay flat here and stick close to their 200 DMAs as $gold corrects.

As far as timing, based on cycles, I would guess that $gold would bottom in late April, possibly around the FOMC meeting on the 28th.  I think the silver miners will bottom before then, possibly well before then, but they won’t take off by any stretch until $gold bottoms.