Sunday, October 16, 2011

Gold Silver Ratio - Entry points for Silver

Over the last 2 years, the Gold/Silver ratio has had a RSI reading over 70 two times indicated below circled in red. (With the 2nd time was a few weeks ago). The 'overbought' reading can be used as an entry point into the Silver market.

The late January 2010 RSI peak had a Gold/Silver ratio just above 70 which eventually dropped all the way down to the low 30's within 1 year and 3 months.  (A LOT of money was made by hedge funds and trend traders during this period).

The current ratio is at ~52 and many precious metals investors believe that the ratio will eventually end up close to 15/1. (The ratio that our founding fathers wrote in the coinage act of 1792)

With Gold currently at $1680, a 15/1 ratio would place Silver at $112.  One can purchase Silver at $32 an ounce today.  Do you like to purchase items when they are on sale?  How about money that you can get for a ~71% discount?


  1. I think there is a good chance that the GSR gets to 60 later in the year. If the stock market drops enough and silver consolidates long enough, the GSR should reverse.

    The biggest problem with silver right now is that it's had 2 huge drops and it takes awhile for investors to come back into the market. They will, but probably still need 3-6 months of sideways before a breakout. Of course any black swan or silver shortages can change things fast.

  2. After following this market for some time, I'll say that anything can happen. It's really up to be 'big money' that flows into the futures markets that will determine the price going forward.

    The LBMA, CME and bullion banks like Goldman / JPM make money going both ways and control this market among others.

    It is my belief that the US Government does not want both Gold and Silver to go up a lot because of inflation. This administration does not want the public to pay $5 for gas and the cost of food to go up next year. Obama want's to get re-elected in Nov 2012.