Topping is a process, and it’s rarely straightforward, especially in metals. As each piece of the puzzle slowly falls into place (price performance, technicals, money flows, investor sentiment, etc.), an impression forms. Gold and Silver broke out to fresh highs Thursday and Friday, but miners underperformed significantly. This development suggests an intermediate degree top may be forming.

Silver has risen for nine consecutive weeks. I couldn’t find another example of a nine-week uninterrupted rally. However, there are two examples of 8-week advances, and each led to a significant top (see weekly silver chart). Now, this doesn’t guarantee a top next week, but the odds certainly favor it.

The divergence between metals and miners combined with the clear breakdown in the HUI:GOLD ratio also supports a top forming. Metals could rise a little more next week, but I’ll be on the lookout for a reversal. Enough proof has accumulated that I may attempt a short next week. I’ll alert members if there is a clear setup.

Correction targets are unclear. However, if miners retrace 50% of their December advance, I think we could see a retest of the December low. I will provide preliminary correction targets once a top if verified.

-US DOLLAR- The dollar is still stuck in the range between 101.75 and 100.40. Prices made a bullish reversal candle on Friday, let’s see if they can follow through.

-GOLD WEEKLY- Volume has steadily declined during this advance, not a healthy sign.

-GOLD DAILY- Gold is very close to the 200-day MA. I will be watching this area closely for a potential reversal early next week.

-SILVER WEEKLY- Looking through the chart, I couldn’t find another example where prices increased nine uninterrupted weeks. There are two examples of 8-week rises, each leading to a significant top. First came the 8-week rise into the March 2008 top and the second appeared during the rise into the October 2012 top.

-SILVER DAILY- Silver closed above the trendline on Friday, but volume was low. I usually like to see two or three closes above a resistance line before completely writing it off. Prices could spike a little higher, but we should get a reversal sometime next week.

-HUI:GOLD RATIO- The HUI:GOLD ratio closed for the second time below the 50-day EMA. The clear divergence between metals and miners points to a significant top forming.

-XAU- The XAU closed below the 50-day EMA, this often signals an intermediate-term correction. Prices falling to 84.00 (the 50% retracement) will confirm an intermediate top and a test of the December low would be suitable.

-GDX- Prices closed down nearly 1% as gold made a new high. This divergence suggests an intermediate top formed in miners February 8th.

-GDXJ- Junior miners were down 2% as gold and silver both made new highs. As long as prices remain below $43.01, I will look to short the next significant bounce.

-SPY- Prices are getting closer to in interim correction (4-7%), and we could see a top next week. I continue to look for the initial signs of a price reversal.

-WTIC- I still have a bearish bias in crude due to the fundamentals and extreme COT numbers. We may still see a quick run to the $56.50-$57.50 level before a move lower. Otherwise, I’ll use a close below the 50-day EMA to signal a correction

It’s taken a while to develop the picture in metals and miners. Several factors suggest miners made an intermediate cycle top February 8th. If this is the case, metals should turn lower sometime next week and follow suit. Nevertheless, prices have been remarkably unpredictable, and we need to remain on our toes.