We begin the documentation by comparing the US Dollar (top graph), gold (second graph) and silver (third graph). We can see that the rally in the US Dollar and the correction in silver and gold all began at the beginning of May. We know that margins for silver contracts were changed five times for a total of an 85% increase, virtually wiping out those on margin. This obvious ploy to drop silver prices was accompanied by shrill cries in Seeking Alpha that the PM rally was over. The next graph shows that silver prices were soon oversold. Furthermore, the silver market split into two: the actual price of physical silver and the price of contracts. In fact, the drop in paper silver set off a scramble, so that it became very difficult to buy silver without delay (backwardation increased in other words).
The next graph (XAU) shows that the larger gold and silver miners began to rally even before silver and gold (next two graphs). However, not all miners are rallying to the same extent. Gold miners are doing a better rally than the silver miners (I choose the same miners as before to facilitate comparison).
What this shows us is that the second tier miners are slower to rebound than gold and silver. Whether these stocks will catch up or not remains to bee seen. However, this makes them even more of a target for acquisition.
Meanwhile, the pressure cooker in Europe and in the US continues to acquire more pressure. What will set off the next leg of PM rally? I believe that the next leg is already under way, but not the robust rally we expect. Only 1% of ,investors now hold gold. When that doubles, gold prices will go parabolic.
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