All that glitters....

Given the meteoric rise of precious metals in the past month, I decided to do a special report. I’ll keep this one concise and to the point, and outline what I am seeing in the shorter term, as well as the potential long term effects of $5000 Gold and $100+ Silver. I’ll be blunt here: Even if this is a new paradigm like the 1970’s and gold is going to 10k/oz, at this current juncture, short and medium term, metals are WILDLY OVERBOUGHT and the risk to the DOWNSIDE is the largest it’s been in YEARS.

Gold has hit the top of a 50 year channel, with the highest 2M RSI in history.

Silver is at an important fib, channel resistance, and the gold/silver ratio is in the range of prior tops

Speaking of gold/silver ratio… a great chart from Macro Charts shows the RSI on the ratio itself and it’s correlation with prior downturns. This would imply silver is at risk of a significant down move

In our financial world of excess liquidity, all that matters is RELATIVE VALUE. Copper/Gold is showing that disconnect here, and Copper is likely to outperform Gold going forward.

Speaking of relative value… Bitcoin is deeply oversold, Gold is deeply overbought… and the ratio between the two suggest it might be time to trade the yellow metal for “digital gold”

One last chart on the short term… the implied volatility (the cost of short term options) on $GLD is the highest in recent history, and call buying is at the highest levels EVER. This is small investors PILING into the market, speculating. Do you want to join them? Or do you want to use them as exit liquidity? I can guarantee wall street will do the latter…

For the bulls, if this is truly a new paradigm for precious metals, the Gold/Dow Jones ratio shows how high Gold went, on a relative basis, back in the late 70’s. It was about 1% of the dow jones by market cap… today it’s about 0.1%... so there is a case to be made for a new commodities supercycle. That being said, even if this is going to happen, we will need a significant correction first.

IF you want to get exposure to the market, wait a few weeks for the correction, and look for some undervalue junior mining stocks. There are still plenty despite the recent move.

TLDR; This is an unsustainable parabolic move, and we are within DAYS of a significant correction

For regular subscribers, my normal market report will be out this week with 2026 predictions! I hope you enjoyed last letter’s HAL option trade at over 400%!

Personally, I have bought some PUTS on the Gold Market here in SLV and GDX, but I consider this a wildly reckless trade… so I am not posting it. IF you are long, I would strongly suggest starting to sell….