Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold vs. Silver – Very Important Medium-term Signal

Commodities / Gold & Silver 2024 May 28, 2024 - 04:32 AM GMT

By: P_Radomski_CFA

Commodities

Gold and silver soared and plunged together, but… Not at the same pace. And this can tell a lot.

Recent Movements and Their Implications

The way in which both precious metals move relative to each other is not random. It has specific rhythms and patterns, and understanding what it means can give one an extra edge over other market participants. Every now and then, the gold-to-silver ratio moves in a specific manner that indicates something important for the following weeks – and that’s exactly what happened.


What you see on the below chart is the inverse of gold to silver ratio – the silver to gold ratio. It makes no difference, in which way one analyzes it, I simply prefer it to view it in this way.
Let’s check what happened.

A graph of stock marketDescription automatically generated

Silver soared not just on its own but also relative to gold. I wrote silver’s outperformance is usually bearish on many occasions, but the intensity with which silver showed strength recently is so significant that it’s visible on a 14-year chart!

Indicators are great tools to average out what’s not important and focus on what is and make specific situations from the past comparable. The two that are particularly useful for comparing the situations in case of the silver to gold ratio, are the Relative Strength Index (RSI) and Rate of Change (ROC) indicators.

When we saw RSI at or above 70 AND ROC after a visible run-up, silver topped. I marked those cases with red lines on the above chart. This combination of signals from both indicators worked in each case in the past 14 years, so the fact that we saw it once again does not bode well for the near-term future of the white precious metal.

A graph with red and blue linesDescription automatically generated

Historical Comparisons and Current Trends

Silver soared over $32, but it’s back below $31 at the moment of writing these words. Given the momentum, the recent outperformance, and silver’s tendency to form fake breakouts, it seems that it can dive back below $30 any day now.

Last Friday, I commented on silver in the following way:

Silver soared where it had soared in 2021 at its top. It was when volume confirmed extreme interest when silver moved to the previous top, which even was at the same (nominal) price level that we see right now (approximately).

Can silver’s rally be trusted this time? Why would we?

Because silver’s fundamental picture is great (structural shortage etc.)? It was great also in 2021. And in 2008. Yet, the white metal plunged in both years and on many other occasions.

And you know what else happened more or less when silver topped in 2021? Meme stocks (e.g. GME) topped after soaring.

That’s exactly what we just saw once again!

A graph of stock marketDescription automatically generated

Ok, the volume is lower as fewer people are interested, but the sudden jump in prices and RSI above 90 make the analogy clear.

It’s the investment public that’s most likely buying – that’s the topping sign.

Miners declined after that top, and… Do you remember what else formed a massive, volatile top at that time when everyone and their brother expected it to shoot for the moon? Silver.

To be clear – I do think that silver is going to soar to new highs and likely well above $100 (possibly even over $200) in the following years, BUT at this very moment, silver appears to have topped, and if stocks plunge while the USD Index rallies, then the silver price would be likely slide in a particularly volatile manner.

Gold might provide a good buying opportunity soon, but I’ll leave the details to my subscribers. For now, thank you for reading today’s free analysis.

Please note that we currently have a very time-limited promotion allowing you to subscribe to my Gold Trading Alerts at promotional terms – the first week is for just $1, so if you’re interested in reading about gold’s upcoming buying opportunity, it’s very easy to do so. Sign up for $1 today.

Thank you.

Przemyslaw Radomski, CFA

Founder, Editor-in-chief

Tools for Effective Gold & Silver Investments - SunshineProfits.com

Tools für Effektives Gold- und Silber-Investment - SunshineProfits.DE

* * * * *

About Sunshine Profits

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer

All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Przemyslaw Radomski Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in