Moreover, even though the gold to S&P 500 ratio moved higher, there was no invalidation of the previous breakdown - only a move back to the previously broken support / resistance line. The 2016 and 2017 lows seem to provide strong resistance, just as they provided strong support in the previous years. The implications are bearish for the ratio and for the precious metals sector.
As far as silver is concerned, we see a corrective upswing that follows a sharp slide and a breakdown below the previous lows. A corrective upswing is something very natural at this stage of the decline and should not be viewed as a reversal.
We marked similar situations with black rectangles. Virtually all big declines had this kind of pause before the slide continued, so seeing one now is definitely nothing odd or bullish. Interestingly, in two cases (April 2017 and June 2017) silver corrected from below the 50-day moving average to slightly above it only to plunge in the following days. So far, the price action is similar.
Please note that the pauses didn’t take more than a couple of days, so it seems that this pause is over or about to be over.
Having said the above, let’s move to the questions that we raised in the opening paragraph of today’s analysis. We wrote that the situation is tense as there are good reasons for miners to reverse sooner rather than later and that there are reasons for the decline to continue. Let’s see them in detail.