Gold/Silver Ratio Continues To Widen
One of the main reasons why silver acts so sluggish relative to gold is a function of the gold/silver ratio, which shows that gold has been outperforming silver since March 2011-- and based on the enclosed chart, likely will continue to do so for a while longer, as the ratio continues to climb to at least 65 to 1, and possibly up to 75 to 1.
This means that when the precious metals are strong, gold will climb by a greater percentage, and when the precious metals are weaker, gold will decline by a lesser percentage than silver-- probably for the next few weeks.
Both my pattern and momentum work on the gold/silver ratio argue strongly that the ratio will continue to climb to a minimum target of 67:1, which is a key resistance plateau.
If the ratio does not reverse at 68:1, then my next optimal-target zone projects to 74.5 - 77.1. This implies that for whatever reason, gold will be in the grasp of a panic advance, while silver will be ignored (like its industrial counterpart, copper).
If gold takes off out of its month-long base pattern, and spikes to $1400-$1420 (last is $1294), and silver climbs to resistance at $21, the ratio will satisfy the next target of 67:1.
Mike Paulenoff is author of www.MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking.