Thursday, July 31, 2014

The Golden (and Silver) Ratio

Pursuant to my earlier post regarding near-term weakness in the gold miners GDX and GDXJ, I noticed that the GLD:SLV ratio is making a descending channel (bearish) in the same kind of time frame that the miner's are hinting at. The channel curiously intersects with a resistance line put in place with a higher low back in February and again in July. If one were to expect precious metals strength in the medium term (i.e., around or after September) with near term weakness which is what the miners are suggesting (depending of course on the steepness of the subsequent fall), then the GLD:SLV ratio validates this hypothesis. I'd like to thank The Rabbit Hole for following this ratio (which is written about here) and bringing it to my attention. It's an invaluable tool when anticipating precious metal price changes.

Jakob Richardson © 2014