RJO FuturesCast

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Metals

Gold/Silver Ratio Nears 25 Year High

Posted 09/21/2018 9:46AM CT | Eli Tesfaye

December Silver is trading $14.34, up 3 cents on the day. With the US dollar in a correction mode, it is not surprising that metals are seeing a pop. The last e-view, I mentioned the sizeable short position by non-commercial traders and it could be a catalyst for short covering to keep Silver above 14.00. It looks like; near-term lows are in for silver. It is entirely possible to get a recovery follow-through price action. For now, at least, all points to the upside with a weakness in the US dollar.

I wrote about the Gold/Silver ratio before, but I thought I bring it up again with the long-term chart attached below. The interpretation of the chart below, of course, indicates that Silver is cheap relative to Gold. It has been near 25 years as per chart below, therefore, it’s something to note that if you are trying to invest in metals, you might want to consider silver seriously. Silver has both industrial use and precious metal.

From the technical perspective, as I have stated below, Silver is fighting to hold above 14.00. For now, a close below 13.90 will signal farther weakness. A close above 14.50 will signal a reversal.

Gold/Silver Ratio Monthly Chart

Gold Silver Ratio Monthly Chart

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Eli Tesfaye

Senior Market Strategist
Eli started his career in the futures and options market while he was in graduate school finishing up his MBA in 2003. Eli specializes in Automatic trading strategies and systematic options trading strategies in futures market. He has been Series 3 license holder since 2005. Eli's is an avid reader, runner, and yoga practitioner.
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