If Investments Were the Olympics, Silver Would Be Ready to Win Gold
The metal has run up so far and so fast that it's getting exhausted.
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If it wasn’t for the move in silver on Monday, I’m not sure the folks on financial television would have had anything to chat about. In fact, my entire social media timeline was nothing but silver.
Oh, sure, there were the usual folks screaming how they were buyers or how silver was going to <insert wild price here>, but mostly it was folks showing us how stretched it is. It is a gazillion percent over its 200-day moving average line. The Gold/Silver ratio is at its most extreme. Ever.
Considering I thought the precious metals were done weeks ago, and therefore I was wrong, I probably shouldn’t even opine, but I can’t help myself. Silver’s move is wild, and wild moves do tend to signal some level of exhaustion, be it on the upside or downside. In this case, it would be the upside.
But to be fair, I am more interested in the fact that (GDXJ) , an ETF which says it is the Junior Gold Miners, but in fact its largest holding is Pan American Silver—yes, silver. Its fourth largest holding is Coeur Mining, which used to be called Coeur d’Alene (CDE) and is the 9th largest silver producer –yes, silver—in the world. Note how it was up and closed slightly down on the day.
I can also tell you that the iShares Silver Trust ETF’s (SLV) volume was literally off the chart as it was the most active issue traded on the NYSE Monday. The volume was more than two times normal—well, recent—volume. It was nearly eight times what had been normal.
If you are like me, you might be thinking, surely the Daily Sentiment Indicator (DSI) on Silver must be 100 by now. But alas, it sits at 88. Either way, at the risk of being wrong once again, this really looks like it was a capitulation to the upside, and it’s time for a pullback.
Aside from all of that, we’re getting that correction in the 493, but the handful of mega caps are taking the mantle and helping push the S&P up. Even though I maintain we are overbought and the 493 are in need of a correction.
One way we can tell they are in correction already is that this is the first consecutive red days for the Russell 2000 in 2026. Also, all the chatter about the outperformance of the Russell has died down.
Otherwise, none of the indicators changed much. It’s hard for them to change when breadth is flat. The Overbought/Oversold Oscillator continues to back off toward an oversold condition. If we can get a solid red day, I think that Oscillator would move back toward the zero line quickly. I still think we see them correct.
