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Gold/Silver Ratio Collapsed This Week, But Sits at Bottom of Price Channel

This week we saw gold and silver explode, with both gold and silver closing above the 50 SMA and 200 EMA. This hasn't been the case in silver since February, and since March in gold.

Here's a look at the gold daily chart.

Gold Futures Daily Chart

What I found especially interesting, though, is that the gold/silver ratio collapsed this week. However, it closed right at the bottom of the price channel on the ratio, which coincides with the 50 SMA on the weekly chart.

Gold/Silver Ratio Chart

Is this time to buy the ratio?

Personally, I wouldn't; I think silver could outperform if this is truly the onset of a multi-year rally. If I was long silver and short gold, though, I think this might be a good time to close or de-risk that trade.

Incidentally, some cycle students, like Charles Nenner, expected gold to bottom in July.


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