Gold to Silver ratio begins to find longer term resistance
13 May 2022 close: The AU/AG ratio has also been subject to some of the wilder gyrations of the Silver price this year with Long term risk weight beginning to find more serious resistance in the 2019 consilidation area before the final major uptrend started in Febr 2020. Our experience with Daily and Weekly risk weight turning down into this new weeek and monthly becoming high risk at a much lower high is a sign for further ratio weakness ahead. This tells us to hold on to a fair Silver allocation which remains unchanged at around 1/3rd of total precious metals. Although we should not exlude the possibility of another hard attack on Silver the technical position is such that Goild/Silver will definitely find that next larger leg down into <60 equilibrium.
25 February 2022 close: At the January update the Gold/Silver ratio had dropped into the 75 handle before rallying back towards 80 and easily holding channel resistance at 83.30. The Gold/Silver ratio again closed below the long term support level and appears to be seeking a more fundamental trend change in favor of Silver. The critical move to confirm this is Monthly risk weight rolling over into a fresh downtrend from the present 80% risk. Maintaining our slight overweight silver is seen as low risk because Monthly risk weight is now on bearish divergence path vis a vis quarterly. The latter being up but not at all looking finished on the downside. We are not trying to finetune the allocation betweek metals as long as the broader precious metals space serves as asset insurance. Which it still does in fact.
GOLD/SILVER Ratio Risk Position relative to Quarterly, Monthly, Weekly and Daily risk weight data.
(Previous update in brackets)
|Trend||↑ (↑)||↑ (↓)||↓ (↓)|
|85 (80)||80 (60)||80 (30)|
Portfolio allocation 40% (40%)