Loading ...I don’t always correlate…
I kept reading.. if the gold to silver ratio goes down.. then price of silver goes up.. but isn’t there an occurrence where the ratio can go down and have both gold and silver price go down? Just that the price of silver is going down less fast than gold. So if this scenario is possible, then following purely the gold to silver ratio as an indicator on increasing silver price could be dangerous…
So I had to look at charts and see how well the price of silver historically correlated to the famous GSR!
Monthly chart show we are close to no correlation right now.. has not happened often since ’76.
So, I go on the weekly chart for guidance on possible turn around. Lo-and-behold… we have been approaching a high negative correlation for the past few weeks! If this continues, the monthly chart should show this! Great for silver longs!
And A final zoom in on daily chart… the -1 correlation is back on track since September… sweet!
Quite right. It’s just a ratio, so it can go down with gold/Silver either rising or falling. The answer to what happens next lies in the careful examination of multiple information sources and putting it all together like a giant jigsaw puzzle. In this case, I believe the GSR breaking down will coincide with gold rising and silver rising faster.
Yep! The negative correlation is setting back at 1:1… so indeed a declining GSR will currently be gold and silver rising even faster. And there is also the case where an inclining GSR could still have gold and silver going up… with gold going up at a higher pace! The exercise I did was to see historically how this negative correlation held up… and it does! With few prolonged exceptions along the way. Sooo fascinating!