While much has been made of the recent move in Gold ($GC_F), Gold Miners ($GDX), and the like, what about “little brother” Silver ($SV_F)? While both are moving upwards, many want to see Silver begin to outperform Gold. Further, some are claiming that the dreary days for Precious Metal bulls are finally coming to an end, but there is also data to show that long-term holders of these assets are using the recent spike to cash out their investments, giving a hint that they may not believe this rally can continue. Gold bugs (and Silver bugs) are seemingly always believers that the next big uptrend is just around the corner, so will the idea of them throwing in the towel be a big contrarian call?
— ivanhoff (@ivanhoff2) July 16, 2019
Silver making its move on gold, copper, and nickel as well. Capital is flying into reflation bets, Mr. Powell has his hands full. pic.twitter.com/l9KqN6ytAd
— Lawrence McDonald (@Convertbond) July 16, 2019
— TrendSpider (@TrendSpider) July 19, 2019
So, we know that Silver looks good. But what traders/investors really want to know is what about the ratio of Gold prices to Silver prices? For many, this is the true barometer for sustainable strength in Precious Metals.
As Chris Kimble points out in recent post, “Silver is an important cog in the precious metals world. Not only is it a core precious metal but it is often a leading indicator for metals bulls.”
When zooming out to a three-decade chart, we can see that this ratio is still very well near its cycle lows, leaving lots of upside potential. However, it could very well be just another short-term spike, as we saw in 2016:
30 year Silver / S&P 500 ratio – Potential double bottom, with slightly higher low, but still below 30 month MA. Possible early Stage 1 monthly base forming #stageanalysis #stanweinstein pic.twitter.com/dbOdidRdJn
— Stage Analysis (@stageanalysis) July 21, 2019
However, I’m not quite sure that there is a trend change in place…yet. If we can get over this recent area of resistance (previous support), then I believe we may be looking at something big:
— Ian McMillan, CMT (@the_chart_life) July 19, 2019
When looking at the Weekly RRG, Silver, Gold, and related components are certainly all moving in the right direction:
Arguably a more important development, Silver Miners are looking to break their recent downtrend against equities and have begun to outperform the S&P 500 ($SPY) again:
Is the recent rally the start of a new trend? Or are long-time Silver bulls looking to get out with what little they have left following a multi-year downtrend:
The retail metals market is all sellers right now. With prices up, long suffering bulls are selling en masse. Premiums are as low as I've seen them in 12 yrs. The US Mint has sold a TOTAL of 500 gold coins in July to distributors. Think about that . . . #gold #silver $GLD $SLV pic.twitter.com/lpAvvEnttM
— Tarek I. Saab (@FibLines) July 22, 2019
Whether this is the beginnings of a big, multi-year bull market (e.g. 2003-2011) or a small blip on the radar (2016), we do not know as of right now. What we do know is that the charts are saying if this is indeed the start, we want to consider getting involved. Silver Miners could be starting a new trend of relative strength compared to broad equities, which is a positive sign for the metal. If Silver can also begin to outperform Gold, this would be another strong signal. Currently, we are in wait-and-see mode with other market participants, but the sentiment is becoming more and more positive as the days go by.