Sunday, 10 December 2017

Pre-positioning for a January rally

For the seventh consecutive year, there has been no autumn precious metals rally. About the best we got were some strong September months, after which a new slide was taking grip, occasionally interrupted by a half hearted recovery attempt.
After median wages have been lagging inflation for decades, it may come as no surprise that precious metal jewels don't often find their way any more under the Christmas trees of the working class. Whereas for the more affluent, the crowding out effect takes its toll.
2017 is no exception, we've witnessed strong gold prices in August and September. Meanwhile, we're down over $150 from the year high; the silver lining being that gold still holds on to a decent gain as compared to last year's December trough. Typically November and December also are the months for tax-loss selling, affecting precious metal miners quite often...
Throughout November we indeed witnessed miners sliding almost relentlessly and leveraging down weaker precious metal prices. SIL/Silver took a dive bringing that ratio to a bottom around Nov 20.  HUI/Gold kept on weakening until a few days ago.  The gold miner pulse page provides you with a weekly update in a few graphs. You find the current situation below.
Despite silver breaking below $16 (and now back to the Dec 2016 low), silver miners more or less ignored excessive silver weakness.  SIL/silver recovered, with the silver miner quotes tempering the slide of the metal.  
Global-X Silver Miners ETF (SIL) relative to the spot silver bullion price. Daily observations over 6 months, click to enlarge
The similar story for gold miners still needs confirmation. HUI/Gold bottomed below 0.140 early last week, closing at 0.142 upon a timid uptick of the yellow metal. Seems as though gold bugs are pre-positioning for a January rally.
HUI/Gold ratio, finding a bottom early last week. We are checking for confirmation during the days to come.
Daily observations over six months, Click to enlarge
Another reason miners no longer leverage down the precious metal slide is the imminent FED rate hike.  Precious metals have anticipated the interest rate hike sliding well in advance.  Another case of 'selling the rumor, buying the news'. If so, we will soon notice...

In the mean time a toll has been paid: the long term gain of our  contributor driven Explorer and Junior Miners spreadsheet is down to 3.38%. Several of our strongholds have seen their extended gains trimmed lately. The number of long term advances (7)  still balances that of long term declines. 

2 comments:

  1. I just found your blogspot from a 3 yo post on tfmr

    fyi

    ReplyDelete
  2. Still on there, with a couple of threads in the 'traders forum section':
    https://www.tfmetalsreport.com/forums/traders

    ReplyDelete