The silver/gold relationship is a key one to watch. Silver is finally outperforming gold and more importantly silver moving up while gold is holding steady (even in the face of good economic numbers and a hawkish Fed). As our friend Chris Kimble, from Kimble Charting Solutions points out this ratio is breaking out of a long-term downtrend line. While this ratio could quickly reverse this is a very good sign for the PM bulls and signifies a potential shift in the PM sector.
Click here to visit Chris’s site for more straight forward market comments.
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This chart looks at the Silver ETF (SLV), Gold ETF (GLD) ratio over the past 10-years.
Metals bulls want to see this ratio heading higher and since 2011, the opposite has been happening. The large decline over the past 7-years has this key ratio testing important support, where a long-awaited opportunity could be near.
The ratio has found line (1) as support a couple of times over the past decade. It hit this support line of late and is now working on a breakout of 7-year falling resistance at (2). Historically when this ratio is moving higher, it is sending a positive message to both Silver and Gold.
Below looks Silver Futures over the past 7-years-
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Silver has been trading in a very narrow range for the past couple of years, as it is forming a narrowing pennant pattern.
It is now testing 2-year and 7-year break out levels at the same time at (1). If Silver breakouts out at (1), it should attract buyers and push Silver higher.
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