Tuesday, September 15, 2009

Silver and the gold miners...

There is a reason the targets for silver and the gold miners are correlated [per NFTRH]. Here is a pretty good visual example. Upper panel is HUI's ratio to silver (SLV), showing the two markets joined at the hip and moving laterally.

The lower panel shows HUI outperforming gold (GLD) all the way to near the target NFTRH plotted for the HUI-Gold ratio many months ago.

So, if you believe the silver bugs are right and it's going to 50 or 100 any time soon, you are holding and adding to gold miners for the long haul. If you believe gold is going to outperform silver and at the same time see the Gold-HUI ratio looking for a bottom, you are way cautious.

If you are a gold sector crack head you love the blow off dynamics, until they implode and leave you holding the bag. If you are an investor, you gladly await the time when gold rises in all things once again, because it will provide the next great opportunity. Yeh, I am being cryptic but it's a blog and it's free. Subscribers, mail in any questions just as one gentleman did a little while ago. Things are at too important a juncture to get caught up in the hysterics.

Edit (1:54) Dear subscribers, this thing (HUI) is looking for the upside target range. Have your heads screwed on straight if and when we get there. Greed dynamics are heavily in play now. All over the markets, capitulation to greed is palpable.