The list of hints that gold is due for a breather include a wide gap opening in the gold-to-silver ratio, plus evidence that gold is being treated as a “big short” by savvy speculators, and surprisingly downbeat views of top gold stocks by leading investment banks.

Peace talks between Russia and the U.S., if they lead to anything, could also be a dampener for gold, which has benefited from the uncertainties associated with the wars in Ukraine and Gaza.

The gold/silver ratio, while not a precise way of valuing either metal, has been around for so long that it has a following and right now with the ratio at 90:1 it is screaming buy silver — or is it saying sell gold?

That buy/sell choice is the problem with a very simple test of dividing the price of silver into the price of gold to arrive at a ratio which is traditionally closer to 50:1 (one ounce of gold being worth 50 ounces of silver).

The current 90:1 ratio caused by gold’s explosive run to US$2918/oz and silver’s sluggish move up to $US32.28/oz can be interpreted as a sign that silver needs to rise (or gold needs to fall) to restore the balance to around 50:1.

Silver believers argue that their metal could rise to US$55/oz (producing a ratio of 53:1), whereas an argument can be mounted that gold could fall to US$1700/oz to restore a ratio of around 52:1.

If the gold/silver ratio is imprecise then so too is a theory that gold has become the ultimate short position for everything that’s wrong in the world today.

The theory of using gold to “short the world” was reported this week in an Australian Financial Review story about Danny Moses, one of New York traders immortalised in The Big Short, a book and movie based on short-selling the U.S. property market before the 2007 sub-prime crash and global financial crisis.

Moses reportedly told an investment conference in Miami that he wouldn’t take a short position against artificial intelligence, but he had been buying gold because “to me, it’s effectively going short all the things that could go wrong”.

Caution about the sky-high gold price could also be measured this week in a sombre assessment of top gold stocks after the release of strong profit results, hinting at future share price falls.

Evolution was the best example of the price warning which followed an excellent first half profit of $385 million (up 144%), and 7c interim dividend (up 250%) – only to be greeted with sell/neutral recommendations and forecasts of a share price fall.

Goldman Sachs reckons Evolution’s share price could retreat to $5.35 from its current $6.20. Macquarie says sell with the price target of $5.50, while Jarden wins the bear of the week award with a sell tip and price target of $4.68 (4c below an earlier target of $4.72).

A similar level of concern could also be seen in the share prices of local silver leaders such as Mithril Silver and Gold which lost 3c this week to trade around 37c, Sun Silver, down 3c to 73c and Andean Silver, down 5c to $1.13 despite a bounce of 5.5c yesterday after the release of a positive report into its Cerro Bayo project in southern Chile.

Small gold stocks, powered by exploration news, produced one outstanding winner in Caprice Resources, up 4.3c (215%) to 6.3c after reporting assays up to 6.4 grams a tonne over 28 metres from a depth of 114m from drilling at its Island project in WA.

Gold will remain an investment focus even if a correction sets in, but other investment themes are starting to emerge, including an interesting way for Australian resource focused investors to play the Trump trade and eccentricities of U.S. President Donald Trump.

Morgan Stanley, in a mid-week note to clients headed “cutting the red tape”, homed in on Australian miners likely to win from Trump’s administration clearing the way for mining projects to proceed.

Mining leaders Rio Tinto and BHP were first mentioned thanks to a clearer road to development possibly emerging for their jointly owned Resolution copper project in Arizona.

Other Aussies in the U.S. mentioned as possible winners by the bank included Sandfire, up 16c this week to $10.61, as its Black Butte copper project moves through the approvals process, and Boss Energy, down 24c at $3.18 as the uranium price weakened but with the Alta Mesa project ramping up in the U.S.

Big picture events which will colour the market in the weeks ahead include Australia’s intensifying political war of words ahead of State and Federal elections and increasing likelihood of a cut in official interest rates, perhaps as soon as next week.

But even a rate cut might not sooth troubled markets as Wilsons Advisory said in a mid-week note headed “Rate cut tailwinds meet valuation headwinds” – a financial market equivalent of Dr Dolittle’s two headed animal creation, the Pushmi-Pullyu which, naturally went nowhere.

Profit season will also come to a head next week with a taste of what’s to come for the miners in the strong result from South32 which beat market forecasts with a net profit of US$375 million and a dividend of $3.40 per share, but not good enough to lift the stock which slipped 7c lower to $3.42.

BHP kicks off big miner proceedings on Tuesday with its half-year results, followed by Rio Tinto on Wednesday with its full year report and Fortescue with its half-year on Thursday.

Uranium stocks this week, as seen in the slide by Boss, had a rough week thanks to a 1.5% fall in the spot-market price of the nuclear fuel to US$67.35 a pound, taking the fall over the past month to 8.8%, defying a positive uranium report from Morgan Stanley which suggested the uranium pullback had been overdone.

Deep Yellow joined Boss on the negative side of the ledger, down 6c at $1.26, as did Paladin, down 59c at $8.24.

FireFly was the copper star of the week with a rise of 14c to $1.02 after reporting that a six rig drilling blitz at its Green Bay project in Canada had encountered thick and rich intersections including 10.7m at 11.2% copper equivalent (copper and gold).

Hot Chili was in the same league as FireFly with a share price rise of 10c to 77c after reporting a whopping 320m hit grading 0.3% copper and with 1g/t gold from a depth of 34m.

On commodity markets, copper rose by US30c to US$4.69/lb as hopes grow for a broad economic recovery which might follow an outbreak of peace in Ukraine.

Other news and market moves of interest this week included:

  • Pilbara Minerals slipping 10c lower to $2.21 thanks to reporting a steeper than expected loss for the half year to December and despite announcing plans to resume work on a lithium phosphate project with partner Calix.
  • Liontown also weakened in the face of oversupplied lithium markets, shedding 3c this week to 64c but did earn a UBS upgrade to neutral from sell with a price target of 75c.
  • Mineral Resources mounted a fightback against months of adverse publicity during the week but was weaker on the market after it reported a fifth truck rollover on its Onslow haul road, closing yesterday at $33.99, down $1.51, and
  • Matsa Resources added 1c to 5.5c thanks to a takeover bid from Petronus Resources which rose by 0.4c to 6.3c.