Watch This Ratio For Silver And Gold's Next Move
Chris Kimble | Apr 19, 2018 10:25AM ET
Metal-heads have been very patient in 2018 as gold continues to press up against breakout resistance.
One thing that has been missing, though, is strength in silver, which after Wednesday's big move, may be just the lift that precious metals need.
h3 Bull-Market Patterns/h3During precious-metalbull bull markets, silver tends to lead. Just like small caps, it adds “beta” when bulls are in control. To measure this aspect, investors can look at the ratio of silver:gold ratio. When this ratio is heading higher, it's bullish and bearish when it heads the other way.
In the chart below, I look at the last 20 years of the ratio between the two metals. Several advances started from a critical support line at (1). The ratio has also formed a bullish falling wedge pattern (2) and looks to be on the cusp of breaking out of the pattern (3).
A breakout here would spring silver much higher and likely carry gold with it. Precious-metals investors have to keep their eyes on this ratio here.
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