Sunday, October 3, 2010

Gold Silver Ratio below 60

The Friday closing price of both Gold and Silver has placed the ratio below the 60 level, (59.72, It takes 59.72 ounces of Silver to purchase 1 ounce of Gold). 

The lowering ratio reflects a few scenarios at this time in the markets:
  • The price of Silver is increasing faster than the price of Gold. (True)
  • The price of Silver is increasing and the price of Gold is relatively flat. (False)
  • The price of Silver is flat with a decreasing Gold price. (False)
  • The price of Silver is increasing and Gold is decreasing. (False)

The precious metals market, specifically Silver is still a ways from the 3rd phase which is the 'mania' phase. It's hard to place a time-line on this as there are a lot of factors to consider. Government, geo political, economic, worldwide demand, investment demand, industrial demand, short covering, etc...

I've recently seen a few Silver investors that mentioned that we are at the start of phase 2 in the silver market which is the bullish run before the mania stage. There are still great Silver related oppurtunities to get into this market, both on the physical ETF and stock sides of the market.

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