Tuesday, March 29, 2011

Chart of the day - USD Silver ratio

Here is a 3 year chart of the US Dollar / Silver ratio.  (How many ounces of Silver will purchase the US Dollar Index) It currently takes 2.05 ounces of Silver to equal the US Dollar Index.

You can see that the trend has been consistently down since late 2008 after the financial market crash. The ratio is trading under both 50 and 200 day moving averages and looks like it is heading lower at a dramatic pace.
Three scenarios for a dropping ratio:
Silver flat and the US Dollar declining
US Dollar flat and Silver rising
Silver rising and the US Dollar declining - This is the current trend (Seen in the chart below)

The RSI is oversold and has been on the lower section of the indicator for the past 6 months with the exception of the January 11 correction.

For reference, here is a 3 year chart of both the US Dollar Index (Dotted Line) and Silver (Solid Black line).

It's a matter of time before the US Dollar/Silver ratio is 1:1. At what price and time will it occur? It's anyone's guess as no one can say for certain. (I do not think that there are very many people that actually monitor or review this ratio).   It is always interesting to make a prediction, so I'll say that the 1:1 ratio will occur at 65 and by the 4th quarter of 2012.


  1. How do you make charts like that? I tried to enter this

    but yahoo cant write the charts. How did you do that?

  2. You can go to http://stockcharts.com and use their charting system. The finance section in Yahoo does not support that function.

  3. Thank you so much! Saved me tons and tons of extra work!