Precious Metals Specialist Durrett on S & P Downturn

We have been in the gauntlet (negative seasonality) for three weeks, and the S&P has remained strong. It closed today above 7600. However, diesel is at an ATH, and Trump is blowing up Iranian oil tankers. Plus, high interest rates are putting pressure on stocks. The 10-Year (4.8%) and 30-Year (5.3%) are at levels that make Wall Street nervous. Then you have factors that Wall Street is ignoring: private credit, housing, and consumer confidence at historic lows. Plus, the AI trade is not exactly a smooth ride. Add all of this up, and my expected correction on Wall Street is still in play.

Gold and silver are still struggling to break out from their 7-month correction. Gold is at $4,400 and silver at $67, below their breakout levels of $5,000 and $70. I still expect to see $4,200 gold before $5,000, and if this happens, then silver will likely retest $60. I would like to be wrong. The S&P will determine the outcome.

The most likely near-term outcome is that the S&P corrects and retests the 200 DMA around 7200 between now and the end of November. If the 200 DMA doesn’t hold, then we will get a whoosh down below 7000. Gold and silver will get pulled down in that scenario. After that correction, gold and silver will rally into year-end.

There are only two charts to watch. First, watch the S&P. It will either correct or make a new ATH. We need it to drop so that money rotates into gold/silver miners. Second, watch the gold/S&P 500 ratio. It’s currently at .57 ($4,407/7636). We need it to reach .70 for the second leg to begin (new ATHs in gold and silver). Those are really the only two charts that matter if you own gold/silver miners. We want to climb to the top of the mountain, and that means the ratio has to reach at least 1.5, although we want 2. A ratio of 2 means gold reaches 2x the S&P.