Friday, August 5, 2011

Gold Silver Ratio

Gold = $1664
Silver = $38.33

Gold Silver Ratio = 43.43

Daily chart of the Gold Silver Ratio from late February, 2011.  You can clearly see a trading range since the Silver selloff / comex margin increases in early May.  The trading range depicted with the blue lines.  Where might a good entry point for Silver buyers be?  It will most likely be at the upper range with Silver dropping and Gold rising or flat.

The Gold Silver ratio will eventually start dropping and break below 40 again.  When?  It's anyone's guess....but the end of this year is a definite possibility.   If Gold reaches $1700 and the Gold/Silver ratio drops to 35 by year end, Silver would then be at $48.57 an ounce.  The spot price is currently at $38.33 which looks 'cheap' compared to where the price may go by the end of the year. (~26% increase from here if the price were to go to $48 by year end.  How much are people getting with a CD or their Savings account?)

Gold is currently leading the precious metals as it is seen as money.  Silver is lagging and anytime you hear that the economy has problems, Silver will most likely be taking a hit.  Why?  Because it is viewed as an industrial metal and if the economy is bad, industry is bad and there will be less Silver consumed into products...... blah blah blah...... That is how it's viewed, so we have to live with the volatility that is inherent with Silver. 

I purchased Silver today and will continue to accumulate going forward. I'm looking for it to drop lower so I can get more at a lower price, especially before the 4th quarter of this year as I am anticipating the seasonal run up with both Silver and Gold.  I am also looking for solid producing Gold/Silver miners to rally in late Aug/Sept.

No comments:

Post a Comment