… and how it gears miners
Last post has been focussing on the price consolidation of gold. Only few quotes below $4000/Oz seemed to indicate a bottom, while $4400 seemed to be a solid ceiling.
But after mid August gold rallied beyond its estimated ceiling. On 25 Aug, the close on NYMEX was $4658, which marks the top of this rally. Gold slid back into its “trading range” with the Friday, 25 Sep close at $4284. Gold held above the $4400 “consolidation ceiling” for 11 consecutive days. Ever since we have witnessed a few more single day closings above $4400. The ceiling suddenly feels much less solid than previously thought.
Gold closing price on NYMEX
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| Daily gold fix price at the NYMEX in USD/Oz over last 12 months |
The 200 days moving average (red line) is still sloping upward, though flattening out. The 50 days moving average (blue line) is sloping up again, which confirms the general observation that the gold correction of the second quarter of 2026 is behind us. Right now, gold is quoting at or near its 50 DMA, which implies that there is no ‘pull’ building up in either direction.
HUI gold miners index
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| HUI miners at the New York stock market close over last 12 months |
The 200 days moving average (red line) has barely leveled off end July. It is again sluping upward. Much the same for the 50 DMA (blue line). It is nearing the 200 DMA which would imply a bullish golden cross. Mining investors feel backed by the observation that the gold correction is behind us and that we have a consolidation at its worst and a gentle uptrend at its best.
The bottom was set during the second half of July, while Gold was flirting with the $4000 price level. We have witnessed a 20% rally since then. Now how does this translate into the HUI to Gold ratio?
HUI index to Gold ratio
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| HUI miners to Gold ratio over last 12 months |
The bullish stance of my interpretation of the HUI gold miners index graph is hereby confirmed. The ratio broke out in August, right at the onset of the gold rally. The ratio even broke above the double tops obsrerved in January and March when gold rallied well above $5000/Oz. Moreover, the yellow metal weakening after the FED rate hike shows no meaningful slide of the HUI/Gold ratio. Mining investors discard the idea of future gold weakness during the rest of the year.
The silver price consolidation
The idea of “The poor man’s gold” even filters through in the ETF offer, where the ‘unit’ corresponds to an initial price of 1/10 Oz for Gold ETF’s and to 1 Oz for silver ETF’s. The Gold to Silver ratio has been swinging wildly. Silver is also desribed as “Gold on steroids”. This implies much stronger rallies but also deeper swoons.. Over the long haul, silver has not been appreciating as rapidly as gold did.
The bimetallic gold/silver standard of the mid 19th century implied a gold to silver ratio of 15.5 (Latin Monetary Union) and 16 (UK, US). The bimetal standard was turned into a gold standard in the 1870′s after large silver discoveries in Mexico and Peru caused a slide of the silver price.
After the US went off the gold standard in 1933, silver coinage went on as before. Silver needed to be capped below $1.29/Oz to allow the minting of monetary silver (from dimes to dollars). With a gold price set at $35/Oz, this implies a Gold to Silver ratio above 27.
At the January speculative silver peak near $120/Oz, the Gold to Silver ratio briefly dipped to about 45. It is now situated near 67. Though silver is extremely important as an industrial metal, with mine supply falling short to consumption, it has taken silver 45 years to exceed its 1980 price spike level of $50/oz.
Silver (NYMEX close) over the last year
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| Silver at the NYMEX Close over the last 12 months |
Both the rate the price rise in Dec 2025 and Jan 2026 and the price range over the past 24 months are a lot more significant than what we have observed for gold. Yet also the plunge from the top is deeper. Silver barely sits above half of its January 2026 top.
Global X Silver Mining ETF, SIL
Most of the silver mined is a by-product of another non-ferro mining opeation. There are copper-silver miners and zinc, lead and silver miners. Many gold miners also have a silver side stream. Moreover, the “primary silver miners” included in the SIL ETF also have a secondary production of gold and/or copper. Some silver miners even diversified into gold mining. As such, we cannot expect the silver price to ‘drive’ the silver mining ETF in the same way as gold may influence the HUI gold mining index. But for what it’s worth, hereby both graphs:
SIL, the silver mining ETF
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| Global-X silver mining ETF, SIL over the last 12 months |
SIL recovers well after the silver slide below $60/Oz in June-July. It stays significantly below its January and March top level. What does that mean for the SIL to Silver ratio?
SIL to Silver ratio
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| Global X Silver miners ETF (SIL) to Silver ratio over last 12 months |
It is quite hard to fathom the silver price influence on the Silver Mining ETF, SIL. The ETF can’t keep up with silver price rising Oct 2025, but especially during the rapid silver price escalation in Dec 25 and Jan 2026. The initial response of silver dropping back from its speculative peak is SIL showing relative strength. SIL has been lagging silver in January and to a minor extent in March. Yet the correlation seems to improve now. the SIL to Silver ratio is gradually climbing with the metal recovering from its correction bottom barely above $55/Oz by mid July 2026.
A price spike followed by a swoon does not imply that miners are able to profit from this opportunity. They may sell forward some of their production, but it is terribly difficult to time the price spike. A silver mining company thrives a lot more in a silver market gradually strengthening over months instead of days. Moreover, the value of the side-streams in gold or copper may blur the silver price exposure.
On balance SIL/Silver is almost steady over 12 months, wheras HUI/Gold has strengthened significantly.
Source:
https://gwyde.blogspot.com/2026/09/gold-and-silver-price-consolidation.html
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