To clarify, I wrote on Jan. 18:
Like visitors lights flashing pink, discover how the HUI Index (proxy for gold shares) is buying and selling nicely under its early 2020 highs? In stark distinction, gold stays reasonably above its early 2020 highs, whereas silver is considerably above its early 2020 highs. The misaligned efficiency – with silver outperforming and gold miners underperforming – places a bow on this bearish bundle.
The underside line?
It’s not solely the case that silver was sturdy and miners have been weak within the final a number of days – it’s been the case over the previous a number of months as nicely. The implications are bearish.
Additionally troubling is that the inventory market that’s hovering within the medium time period, hasn’t shined its mild upon the PM market. Contrasting the mantra that ‘a rising tide lifts all boats,’ fairness market energy hasn’t triggered a sustainable rally in silver or the gold miners. And this “ought to have” been the case – each are extra linked to shares than gold is. Gold shares as a result of they’re, nicely, shares. Silver, because of a number of industrial makes use of
All in all, primarily based on what we noticed in silver just lately, it doesn’t appear that we’re more likely to see a lot increased treasured metals costs with out seeing a significant decline first.
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Przemyslaw Radomski, CFA
Sunshine Income: Efficient Funding by means of Diligence & Care
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