Let's see where we are since our last posting two days ago on the G/S Ratio on SilverSeek. We were looking for a Fib pullback to 1.98. In Fib terms that's a 62% pullback. It's gone to as low as 2.008 as you can see on the Daily chart on the left below. Note that the same indicators are still in transitional mode territory, i.e., below their threshold baselines. Recall that we must see the Wm%R peek above -80, a black-over-red line crossover for the SlowSTO, and the MACD vertical bars turn up. None of these have occurred...yet.
Now, once they do, we're not done. We must have confirmation from the same chart , but in WEEKLY format. And, it will lag, but we want all the stars lined up for us before we throw in our moola. We don't want any stutter-step false starts than can be thrown off by the daily performance.
Okay, say we hit the confirmations on the weekly G/S chart, and we're all set to go. But are we? This is for the physical purchases of the metals only.
If we want into the leveraged pm stocks we want the same WEEKLY confirmation from the HUI which is shown here. Right now it's telling us it has a way to go before reversing to the bullish side.
Two explanations: 1) the G/S Ratio is nearing a bottom, and the HUI stocks will lag the renewed bull move, or 2) the G/S Ratio is going to the next lower Fib level to an 80% pullback.
Whatever the near term should hold for us these are just a couple more tools in your treasure chest. If used with your sound fundamentals of individual stocks you can keep yourself out of serious trouble, and be on the right side when the Risk/Reward balance tips in your favor. Absolute PATIENCE is called for.
Additional Ratio charts: $HUI:SLV: not favorable for an upturn soon. There will always be individual stocks that will peak & bottom ahead of the HUI, but I use it as a signpost for the herd.
Have you noticed that through this whole exercise we haven't spoken of dollar targets or money values at all! Knowing the fundamentals that we are in a long term dollar decline should be enough to give you the wisdom to realize you should be in precious metals as much of the time as you can, pocketing profits near the top, and buying the ounces (shares) back at cyclical bottoms - - no fiats involved. They'll grow in gobs by simplifying your investment strategy by keeping them out of your equations.
Knowing as little as I do, I will go as far to say that the week between Christmas and the new year may be our pivot area. That's how I treat my emotional urges. But, should that not be the case, I beat the urge to buy prematurely with the technical indicators on the charts!
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