It looks like front month silver is heading to $30.00. Not sure what to expect after that but the trend is your friend. Attached is a chart of gold/silver ration you don’t see every day. I want to bring to your attention that gold really outperformed silver from 2011 until march of this year. Then you see a sharp drop of the ratio high of over 112 on monthly bases to what is today, a little over 72. As you see on the monthly chart of the spread, the trend line comes a tad above 40. Obviously this will take some time to happen as the trend extends all the way to 1970’s. .  

As I said before, the path of least resistance remains up. Silver will continue to benefit over gold on this rally. The only thing that could slow down silver is increase in exchange margin, and significant reduction in new Covid cases. A trader once said, “ trade what you see, not what you think”. Any  pull back, like today with silver down 27 cents at 28.00, will likely be seen as an opportunity for late comers to jump on the bulls wagon. We can also approach this market using options as well the 1000oz contract.

Gold/Silver Ratio 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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