Today James Turk told King World News that the gold and silver correction is ending, but he also highlighted what is getting ready to soar.

May 6 (King World News) – James Turk:  It looks like the correction in the precious metals is ending, Eric. 

Today’s bounce may even be an indication that last week was the low, but gold and silver still need to hurdle their short-term downtrend lines. Once they do, it increases the probability that their price uptrends are resuming.

In this correction there has been a clear difference in the performance between the two metals, with gold doing better by declining only 4.5% from its high. It has been holding above $2300. Support that is developing at that level is positive news, which may also be helping the share prices of gold mining companies. 

The mining shares are being accumulated. As we can see on this 2-year chart of the XAU Index, the mining shares have been building a huge base.

XAU Mining Shares Have Built Massive Base, Preparing To Explode Higher

Since breaking above 130 on April 2nd, the XAU Index of gold mining share prices has held that level, but so far has been unable to break above 140. That is a worrying sign – there are always things to worry about – and here is another.

The current pattern is similar to one formed last year that failed, sending the XAU Index lower. That could of course happen again this year, but I don’t expect it. By failing to keep up with gold – which has soared to record highs – the mining shares are signalling that they are undervalued. It’s normal to expect the mining shares to be making record highs along with gold, but the mining shares are not at or even near record high prices. 

It is my expectation that once the XAU Index breaks out of its base by hurdling above 140, there will be much higher prices in the months ahead. 

Silver has been the weaker precious metal, declining 8.4% from its high. Silver’s relative weakness in this correction is apparent from the gold/silver ratio. After falling from the low 90s to 83 as silver was climbing higher and outperforming gold, the ratio has now inched back up to 87. 

I do not expect the ratio to climb back into the 90s. But if it did, it would be a signal that silver is not yet ready to break out of its huge base built over the past four years. 

I think it will be particularly important this week to watch developments, Eric. To get the confirmation I am looking for that the bull market in the precious metal is resuming, gold needs to hurdle $2340, while silver needs to climb above $27.40 as a first step. More importantly, silver then needs to hurdle $28, which is the key breakout level.

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