Gold / Silver ratio - detailed analysis
Gold / Silver ratio - detailed analysis
Today I'm going to take a more detailed look at the gold silver ratio, the events that created it and the underlying price action. (numbers on chart referenced below):
1 - August 15 – 1971 – Nixon unilaterally cancels of the direct international convertibility of the United States dollar to gold. This resulted in a strong rise in the price of gold from $350 all the way up to $850 in 1980.
2 - 1980 high in gold at $850 and silver at $50 resulted in a Gold / silver ratio of 17/1 as the prices of both metals spiked.
3 - Between 1990 and 1993 the price of silver fell precipitously as low as $3.6 and remained at depressed prices during the early 90's. Gold also fell, but not as much as silver. This resulted in a spike in the ratio all the way up to 100/1. The ratio remained over 80/1 for 5 years before dropping back down as prices started to recover.
4 - and 5 - metals prices increased gradually resulting in the ratio falling back below 80/1. This initiated a three and a half decade time span of 80/1 creating solid resistance. In subsequent years every time the ratio rose about 80/1 this was associated with a major bottom in the precious metals prices.
6 - In late 2001 the metals hit a major low, with silver at $4. They then proceeded to climb over the next 4 years with silver more than doubling in price.
7 - At the beginning of the financial crisis of 2008 the metals again started plunging along with all major markets. Again the ratio hit over 80/1 as the price of silver fell from $21 in early 2008 all the way down to $4.50 in October 2008. Prices then recovered and silver reached almost $50 in 2011 creating a spike down in the ratio before again crashing.
8 - Late 2015 saw another major bottom in gold and silver prices and the divergence caused another spike in the ratio above 80/1. This was followed by the 2016 recover where silver gained significant ground, only to meander sideways all the way up to where we are today.
9 - Today we see another divergence in gold and silver prices. Gold is pushing steadily north while silver continues to be in a sideways consolidation. This has created another 80/1 ratio peak.
As can be seen, every peak in the ratio has been as a result of the precious metals prices hitting major bottoms, where gold falls and silver slumps. What follows is usually an aggressive move to the upside in both metals and a spike lower in the ratio as silver massively outperforms gold.
Friday's price action was very interesting. Silver fell below support indicating that a major decline would follow, but then during the day it recovered just enough to close bang on the support line. I posted another small chart in the comments showing this. This could be a major bullish signal that adds fuel to the fire suggesting that both metals are getting ready to fly.
You can read Friday's post here:
https://steemit.com/silver/@unclehermit/silver-oh-dear
We aren't out of the woods yet, but all the ducks are lining up.
For disclosure, I'm not a professional advisor and this is not investment advice, merely my own observations of the market and indexes, so do your own research.
Greetings @unclehermit! Your post was chosen at random and was resteemed as part of Shareables' campaign. Enjoy your free resteem!
@Shareables, we resteem anything we find shareable. Always strive for quality content. Go on express and harness your blogging potential!
God bless from us @Shareables!
Great topic @unclehermit. Been watching gold and silver for quite sometime, the past few months I noticed that some people were putting more faith in Bitcoin than in gold. There was billions moving into Bitcoin and nothing moving into precious metals. This caught my interest and I wonder how the future price of gold and silver will be affected by digital gold. I blogged about comparing Bitcoin and Gold but didn't touch on the actual relationship in prices as at this point it's just speculation.
Nothing beats the Shiney metal and I will always hold physical metal and the odd mining stock or two in my portfolio. Right now I have more precious metals and cryptos than the recommended 10%. Is it 10% Bitcoin and Gold or has the paradigm changed to 10 percent precious metals and 10% cryptos versus 80% everything else?
I suspect a few people got burned by bitcoin. Personally I'm not a crypto investor. I see it as a technology which is amazing, but it will also become obsolete very quickly. Indeed the blockchain could be usurped by hashgraph which offers a much improved decentralised ledger than the blockchain protocol. As for gold backed crypto. Yes I agree it's something to watch and it could create a resurging interest in the metals from crypto investors.
The data is there as you correctly point out. The data is there which shows manipulation as well. The only question is “when”? When will this sharade and crime foisted upon the American people end? Will it be cryptos that start the dominos?
Nobody really knows when and even the charts are not yet conclusive. The consolidation appears to be in the first wave of a bull market, this could go on for some time before a break out confirms wave 2. If you look at the bigger long term picture, you could argue that we are basing out at the beginning of wave 2 (where 2011 was the wave 1 top). That would potentially take us to $3000 - $5000 in wave 2 but perhaps not for a few years. Wave 3 (the final blow off top) would then arrive very quickly and the top would be beyond anyones expectations before correcting back again.
The alternative view is that 2011 was the blow off top and we will remain in a long term consolidation for years. I hope not, and all the signals would suggest otherwise, but that's where we are right now. Furthermore 2011 is hardly likely to be a blow off top, because, silver in particular, did not exceed it's 1980 high.
Congratulations! This post has been upvoted from the communal account, @minnowsupport, by unc.hermit from the Minnow Support Project. It's a witness project run by aggroed, ausbitbank, teamsteem, theprophet0, someguy123, neoxian, followbtcnews, and netuoso. The goal is to help Steemit grow by supporting Minnows. Please find us at the Peace, Abundance, and Liberty Network (PALnet) Discord Channel. It's a completely public and open space to all members of the Steemit community who voluntarily choose to be there.
If you would like to delegate to the Minnow Support Project you can do so by clicking on the following links: 50SP, 100SP, 250SP, 500SP, 1000SP, 5000SP.
Be sure to leave at least 50SP undelegated on your account.