(Kitco Commentary) - As suggested was the probability in my last writing, gold outperformed silver this week, and an update to the charts indicates gold's outperformance remains probable.
Below is silver on the 4-hour time frame as presented last week, with the support/resistance lines extended. The chart shows a breakout from the $93-ish level that has solidly reversed. Bulls found support at $78, but it stands to reason that the wall just over $90 will take serious buying pressure, similar to that seen in late December and early January, to crack.
Conversely, gold held its breakout over $5,100, and until proven otherwise, it stands to reason that the level will now act as support. Below is the same 4-hour chart as presented last week, with the upper support/resistance lines extended. Bulls really want price to pierce the March 2 high of $5,360 while momentum moves into, and stays in, the overbought position. Another lower high would be a warning sign that sideways downward action is on the immediate horizon, perhaps complemented by escalating volatility to fit the very wide, established price range.
Below is a view of the gold/silver ratio with the same support/resistance lines as shown last week, zoomed in to the daily view. In sum, it seems to me that the move in the ratio will continue upward regardless of price direction in the underlying metals.
On Jan. 16, in a piece titled "Silver and S&P 500: Complacency is your enemy" https://www.kitco.com/opinion/2026-01-16/silver-and-sp-500-complacency-your-enemy, I suggested that stocks were stretched too far above the 200-week average price. Although some of the gap between the current price and the 200-week price has since closed, there is still quite a way to go for the base case to play out. No one knows whether this would happen via a sideways grind or a downward selling cascade, but a look at the history of market corrections under President Trump's tenure suggests the latter is the probability.
I remain very open to the possibility, though not the probability, that geopolitical instability subsides with an expedited resolution to new and ongoing hot conflicts. It seems to me that outcome is certainly the most politically advantageous for the current Presidential Administration. If that does somehow play out, we could be looking at conditions conducive to a stock market bubble not seen since the late 90s. Taking it a step further—should the S&P realize the probable correction and the catalyst for a bottom be conflict resolution brought about by a US-led effort—that could easily become a launchpad akin to the October 1998 bottom.
Thanks and good luck.
