Continue to Buy Gold….. in Silver Terms

• Posted by Greg Harmon
• on January 28th, 2016

I have often noted the fallacy of buying gold to fit a narrative. It is thought to be an inflation hedge. But there is no real correlation there. A place of safety during conflict or world wide meltdown. But that has not played out either. Gold seems to be good for one thing. Trading.

It does a good job of following technical patterns in the long run and short run. If you are more long run inclined and getting pressure to buy Gold here is a way to do it on the cheap. Sell Silver to fund your trade.

The chart above shows two longer term views of the ratio of Gold to Silver, and both look positive, despite having long runs already. The first is the series of horizontal lines. These are Fibonacci retracements. The ratio made a high in late 2008 and a low in 2011. From then it has retraced almost 88.6% of the move. If you want, wait for a move over that 88.6% level to follow it to a full retracement. The second series of angled lines make up an Andrews Pitchfork. This view shows the ratio closely following the path higher between the the Median line and a 50% line parallel to that median line. The point is the trend is higher.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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