Sunday, August 28, 2011

Silver to Gold Ratio Getting Ready To Resume Uptrend

The silver to gold ratio more than doubled as silver rose from $16 to $50.  Then the CME came in and hiked silver margins repeatedly in conjunction with JP Morgan selling massive amounts of paper silver into the market until they got their desired result which was knocking the price of silver down from $50 to $32 in a very short time frame.

Since that time, gold has become the star of the show and all eyes have been focused upon the golden boy.  Meanwhile, silver sits quietly in the shadows garnering little fanfare or attention.  This is all well and good as the silver to gold ratio looks to be slowly ending its counter trend move and prepares for its next move up.

Here is the daily Silver:Gold ratio chart:  Notice how it has formed a down sloping penant formation.  Also look at the PPO on top which has not confirmed this downward bias.

Now take a look at the same Silver to Gold ratio chart only this is the weekly version: Notice how the slow stochastic is extremely oversold and has been for a while.  It is now starting to creep slowly higher.  You can see the same penant formation on the chart and also notice that the MACD has now worked off its overbought condition.

So as all eyes are glued to GOLD, silver is percolating in the background, building its new base to launch higher from.  Got Silver? Got Gold?

As ERIC says, Silver Is A Tempest In A Teapot....... Are You Ready?