Silver soars, miners disappoint: The new normal

Few people seem to have believed me when I wrote that silver was likely to disconnect from the rest of the precious metals sector due to its unique fundamental situation. 

And yet, that’s exactly what we see.

Silver breaks away

Silver is making new highs as I’m typing this, and it’s still a few dollars away from its nearest target area. Congratulations on your profits in this market, thanks to the long trading position in it, as well as investments and insurance capital positions.

Its upper border at about $70 is confirmed by more techniques (Fibonacci extensions and the lines duplicating the sizes of previous rallies) than its lower border, so it seems that the white metal will rally by another $4 or so before reversing.

Will this be the end of this rally? That’s quite likely, based on what’s going on in the USD Index, the general stock market, and the terrible – and worsening – situation on the jobs market.

However, let’s keep in mind that silver has multiple individual reasons to move higher, so there could be many surprises to the upside, and silver could get much more support than gold or mining stocks when stocks slide and USD soars.

A $70 peak – Then a $50 test?

My current expectation is for silver to rally to about $70 and – either then or from higher levels – decline back to $50 – finding support at the level that provided resistance for decades. If that happens, and silver holds at $50, it will be a tremendous buying opportunity.

Unlike silver, mining stocks are unlikely to find this kind of support. Silver futures are up by about 4% today.

Miners are flat.

Comparing to Dec. 11 – gold is above this day’s high, silver is WELL above this day’s high, and mining stocks are visibly below this day’s high.

Also, I previously wrote about bitcoin providing major sell signal for the stock market. Here’s another one.

Tesla – the recent tech leader – just failed to hold above its previous high. This is a sell signal – a strong one because of this company’s popularity among investors.

And if you look closely, you’ll notice that in late 2024, a topping Tesla heralded declines for the rest of the stock market.

This perfectly fits what I’ve been writing about previously.