Technical Scoop: Bomb Ripples, Commodity Divergence, US Down

 Excerpt from this week's: Technical Scoop: Bomb Ripples, Commodity Divergence, US Down

Gold and Silver

Source: www.stockcharts.com

Is the next major up wave for gold, silver, and the gold stocks about to get underway? The events in the Middle East with the bombing of Iran might be the catalyst, not only for oil and gas to rise but also for a rise in precious metals. By any measurement, they’ve already had a banner year. It is, we suspect, about to get even better. With things deteriorating geopolitically, conflict still on the domestic political front, deteriorating economies in the West and massive debt, gold and silver have only one way to go and that is up (with periodic sharp corrections, as we saw recently).

This past week was no exception. Gold rose 3.3%, silver was up 11.7%, platinum was up 9.4%, and the near precious metals saw palladium flat and copper up 2.4%. But once again it was the gold stocks that shone with the Gold Bugs Index (HUI) gaining 9.6% and the TSX Gold Index (TGD) up 8.7%. Both leaped to new all-time highs and appear to be leading the metals. It’s only February and already gold is up 22%, silver up 31.7%, platinum up 16%, the HUI up 39.5%, and the TGD with a gain of 34.9%. Remember that both the HUI and the TGD gained over 100% in 2025. At the current pace, both could well soar over 200% in 2026. Many believe the precious metals stocks are still undervalued.

Naturally, don’t take this to the bank. If peace breaks out tomorrow, they could quickly give back all those gains and then some. But, right now, peace seems to be a distant dream. Adding fuel to the fire, Pakistan and Afghanistan are also at war and the war in Russia/Ukraine rages on. War, it seems, is spreading. The question becomes, when does it expand further and bring in China and Russia? Many have been predicting that World War III is getting closer.

Inflation is still hot or at least lukewarm (note that the Producer Price Index came in slightly above expectations this past week). However, bond yields fell this past week, which is encouraging for both gold and silver. With silver enjoying a strong week, the gold/silver ratio fell to 56 this past week, down from 60.4 the previous week. The recent low for the ratio was 44. Many are predicting a fall to 20. Holding things constant with gold at $5,260, that suggests silver at $260.

The outbreak of war against Iran is not going to be friendly to the already bloated U.S. budget deficit. War is expensive and the U.S., with a budget deficit to GDP of over 6%, could see it go higher. This adds to the U.S.’s debt woes.

We could be embarking on a fifth wave to the upside from that low last April 2025. The fifth wave can sometimes prove to be more monstrous then the third wave. New highs should confirm we are on our way. The gold stocks are leading and that appears to be positive. We are not yet overbought, suggesting we have considerable room to move higher.

Source: www.stockcharts.com

Read the FULL report here: Technical Scoop: Bomb Ripples, Commodity Divergence, US Down

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David Chapman is not a registered advisory service and is not an exempt market dealer (EMD) nor a licensed financial advisor. He does not and cannot give individualised market advice. David Chapman has worked in the financial industry for over 40 years including large financial corporations, banks, and investment dealers. The information in this newsletter is intended only for informational and educational purposes. It should not be construed as an offer, a solicitation of an offer or sale of any security. Every effort is made to provide accurate and complete information. However, we cannot guarantee that there will be no errors. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the contents of this commentary and expressly disclaim liability for errors and omissions in the contents of this commentary. David Chapman will always use his best efforts to ensure the accuracy and timeliness of all information. The reader assumes all risk when trading in securities and David Chapman advises consulting a licensed professional financial advisor or portfolio manager such as Enriched Investing Incorporated before proceeding with any trade or idea presented in this newsletter. David Chapman may own shares in companies mentioned in this newsletter. Before making an investment, prospective investors should review each security’s offering documents which summarize the objectives, fees, expenses and associated risks. Although Artificial Intelligence (AI) may be deployed from time to time, AI output is monitored and adjusted, if necessary, for accuracy. David Chapman shares his ideas and opinions for informational and educational purposes only and expects the reader to perform due diligence before considering a position in any security. That includes consulting with your own licensed professional financial advisor such as Enriched Investing Incorporated. Performance is not guaranteed, values change frequently, and past performance may not be repeated.