The Gold/Silver Ratio is Approaching an Extreme Level

The gold/silver ratio is an excellent measure of overall market risk appetite, particularly when it reaches extreme levels. Last April the ratio nearly fell below 30 in a powerful indication that the anti-dollar risk trade had become wildly overheated. Silver has always acted like a “high-beta” little brother to gold, but the beta knife cuts both ways as silver investors have painfully learned in recent months. The gold/silver ratio is now approaching key resistance in the 58-60 area, is it time for some mean reversion back to the low 50s or a further exodus from risk and a push above the 60 level?

Click to enlarge

$GLD/$SLV Daily:

 

Gold/Silver Weekly:

Silver is reaching short term extreme oversold territory; therefore, I expect some mean reversion in the gold/silver ratio. However, a breakout above 60 would send a powerful signal of risk aversion.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Powered by WishList Member - Membership Site Software