The continued sideways or coiling action in Silver futures stands in contrast to some strong upward price action in junior mining stocks. This is one symbol that money may be looking to actually sell high (in terms of stocks and high end real estate) and begin to rotate into the beaten down, left for dead precious metals sector. The fact that Thursday and Friday’s moves in the junior mining stock ETF, Market Vectors Junior Gold Miners (ARCA:GDXJ), occurred on very high volume is a tell that the bear market for all things gold and silver related could be nearing its close.
For its part, silver refused to break down last week below the 18.50 area, which had marked the prior bottom of last year. But the price is still very much on lockdown beneath 20 dollars an ounce. The near record level of complacency in conventional asset markets likewise continues unabated. I think that with time this complacency will find the Fed asleep on the job in terms of fighting the next battle caused by their policies, which for me will be inflation. Oil is stubbornly holding above the 106 area, reportedly because of renewed conflict in the Middle East. But it could just as easily be the case that all of the stimulus pumped into the system these past five years is getting ready to find a home in assets other than those favored by central banks. From a seasonal perspective, as we move through the summer and into fall, we should keep an eye on the price of tangible assets, as they may start to attract more money than some currently think possible.