The Technical Take: Silver ETF

It's the best 2 out of 3. It's me against the the i-Shares Silver Trust (symbol: SLV).

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Deflated!

Just when I get all poofy about some market "call", here comes Mr. Market to deflate my bubble.

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Did You Sell GLD, GDX, SLV?

Ok, this one is for all you bull market geniuses out there who have been buying the SPDR Gold Trust (symbol: GLD), the Market Vectors Gold Miners ETF (symbol: GDX), and the i-Shares Silver Trust (symbol: SLV) all the way down and since they peaked in mid January.

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As A Corollary To A Higher Dollar....GLD, GDX, SLV

As a corollary to a higher Dollar, it is my expectation that precious metals will be under pressure.

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Silver v. Currencies

The "everything is up but the Dollar trade" is getting a little bit ridiculous and a little bit frothy.

Figure 1 is a weekly chart of a continuous silver contract. The indicator in the lower panel measures silver's 52 week performance relative to a basket of 8 currencies.Those currencies are: 1) Australian Dollar; 2) Canadian Dollar; 3) Swiss Franc; 4) Eurodollar; 5) British Pound; 6) Singaporean Dollar; 7) Japanese Yen; 8) US Dollar. Relative to these currencies, silver has been outperforming to an extreme degree. Since 2004, such extreme out performance has led to intermediate term highs in silver. Furthermore, silver is at the upper end of a well defined up trend channel.

Figure 1. Silver v. Currencies/ weekly

How do I square this analysis, which suggests froth in metals, with the "breakout" in gold? I don't and I can't. Maybe the move in metals is overdone; maybe it isn't. Trends take time to play out, and prices don't get to their destination all in one day or one week. I don't have an answer. This is why it is called trading as in there are trade offs.