Excerpted from the November 7th edition of Notes From the Rabbit Hole.

Let's begin with a weekly view of the wild man... silver. I am going to tweak the target to 31.50 from the previously noted 33. Before this target is reached, one can expect a correction. At least that would make for a longer lasting and more sustainable bull leg.

Is today similar to the 2006 peak or is it something more dangerous, like the peak of 2008? I will say neither, because the T-bill yield (and thus Fed funds) had been rising into the 2006 top, and declining relentlessly into the 2008 top. Today, we have a Fed managing bottomed out T-bill yields and getting 'creative' in their use of additional inflation mechanisms.

Add to this the sentiment backdrop, which had seen bull hubris permeate the commodity complex in both prior cases while today, inflation (and commodity price) expectations seem to be flaring wildly and out of nowhere (what, no deflation?!?), without the long comforting cyclical bull market that buffeted the previous sentiment structure. People are only now beginning to admit that there is a broad bull market going on.

Silver Bottom Line: The big picture sentiment backdrop is fairly positive, interim correction is likely and the measured target is above 30.

Gold

Silver's sensible, unspectacular dad continues to work its way higher without the fanfare and theatrics, preferring to let the poor man's gold do the heavy lifting in sector leadership. Ever since it tore apart our former Gold-Silver ratio bottoming pattern, silver has indicated the speculative potentials within the precious metals sector. Gold on the other hand is in tow, lagging and rising.

The large Cup targets a Sinclairian 1,673 while the little one targets 1,463. Note how gold's MACD looks more sustainable than that of silver. Note that gold's relationship to silver will be an important signpost going forward because, when it is time to watch for Bernanke's ill-fated soufflé to collapse, gold will be outperforming as liquidity drains.

Gold Bottom Line: Gold, as it has done since the beginning of the secular bull market, is rising steadily. That is because it is the default (as opposed to official) money in a monetary world that has lost all concept of value amid waning confidence. Gold can correct just as it has done periodically along the entire bull. Corrections are buying opportunities for those with no or little insurance. The measured targets are noted and they are just the technical objectives of the weekly chart. Ho hum.

Gold Miners - 3 Snowmen

Sometime, perhaps in the dead of winter or pre-spring thaw, if, while standing by the punch bowl you happen to look out the window and see three snowmen (888) lined up in a row, you might take note. That is our measured upside target for HUI.

As long as the breakout to all time highs holds - and I see no reason why it shouldn't since the impulsive rise last week was the second try for blue sky and closed the week strongly - the target remains loaded. How can we possibly be going to 888? I don't know, I am just a chart twittler and this is the measurement.

HUI Bottom Line: Think about the power of the relentless decline to 150. Think about the fear and angst involved therein. Now think about the potential for all those frightened herds to become brave as they seek to negate those terrible losses. Think about what could be a significant upside blow off. Think about the 3 snowmen.