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.

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