GOLD/SILVER Ratio Price Risk Analysis
(Previous update in brackets)
|Trend||↑ (↑)||↑ (↑)||↓ (↑)|
|60 (60)||45 (40)||85 (85)|
Portfolio allocation 40% (40%)
Gold Silver ratio analysis
03 December 2021 close: Daily risk weight has turned down after the Gold to Silver ratio touching 80.20 on Thursday. It is always hard to predict where this correction will end but the super cycle scenario points towards the technical condtion of a new low being made sometime in the near or more distant future. The Weekly and Monthly time intervals show an historically weak correction upward. Like Platinum, a Silver shakeout would present with an extraordinary opportunity to buy more and not as a signal to remove the silver allocation. It is a matter of time for Silver to reach again its long term equilibrium versus Gold. The interim quarterly chart below show a pattern that does appear often and resembles most the 1990's period where silver ended the rally against gold at around a price ratio of 50 Silver ounces to one Gold ounce. We would expect this type of move to play out again in the coming few years. Hence a slight overweight silver in our metals portfolio.
26 November 2021 close: Where we kind of expecting the Long term monthly signal to turn more bearish but the higher volatility in Silver pricing has pushed risk weight into higher ground but still trending up as well. This picture cannot exclude another attempt to break 80 ratio again which is where we resided much of the period between 2014 and 2019. It is very unlikely that the current medium uptrend (the Weekly time interval) will not show a bearish divergence once it peaks above the September high of 80.63. Given the speed of recent corrections this is not an easy and tradeable asset class. One is more likely to be whipsawed when playing short term risk signals, hence remain patient for the trend to return towards the long term sub 60 averages in due course. It isn't too bad to own a decent amount of precious metals over the Christmas period whilst the inflation is not slowing down it seems.
19 November 2021 close: Silver also reacted sharply to the previous week's rally with a 2% loss versus gold finishing the Gols/Silver ratio at 74.74 last Friday. The Gold/Silver ratio is currently battling against the 74 handle support and this may take a while longer. The chart pattern that is unfolding is morfe likely to develop that necessary break that will this cross to seek the initial mid 60's handle direction.