Silver To Gold Ratio At Important Juncture For Bulls

Chris Kimble

When the precious metals sector is ready to outperform, it often receives an early signal from silver prices.

When Silver outperforms, it tends to bode well for Gold and the metals sector. This is similar to the way that leadership in Nasdaq or small cap stocks signal “risk-on” for the broader stock market.

In short, it never hurts to have Silver leading the charge if you are precious metals bull.

Precious Metals: A Theme To Watch In 2018?

One way to measure relative strength is to track the Silver to Gold ratio. When it’s heading higher, Silver is outperforming… when lower, silver is underperforming.  Pretty simple.

Looking at the chart below, you can see that this ratio hit important support (point 1) over the past few months and is trying to move higher.  It is also trying to form a bullish inverse head and shoulders pattern (point 2) while testing its downtrend line (point 3).

In short, a breakout to the upside here could ignite a bullish move in precious metals.

Silver to Gold Ratio Chart

silver gold ratio chart bullish precious metals analysis_16 january 2018

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Twitter:  @KimbleCharting

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.