Friday, July 1, 2016

Silver Is Supported By Fundamentals

During bull markets in precious metals silver is stronger than gold. And vice versa.

The chart below shows silver's relative strength against gold:

Note that during bull markets silver goes from its relative undervaluation against gold (a yellow area in the lower panel of the chart) to the relative overvaluation (a green area).

Another thing - it is very easy to find the best long-term opportunities to buy silver - look at the violet bubbles.

On the other hand, it is hard to find when to sell silver. The green area on the lower panel indicates that silver should have been sold when the price ratio of silver to gold was in the range of 0.022 and 0.031. 

Well, it is quite a wide range so we have to be very cautious when deciding when to sell our silver. 

However, now we are very early at the beginning of the bull market so we have time to decide. Anyway, I will try to keep my readers informed when silver is close to its relative overvaluation against gold.

Finally, look at the chart below:

It looks like there is less and less silver in the COMEX vaults. Since the end of June 2015 as many as 32.5 million ounces of silver were withdrawn from COMEX. 

It is a totally different pattern than that visible in COMEX gold, where 1.24 million ounces were added since June 2015.

It looks like the silver is strongly supported by fundamentals (relative undervaluation against gold and withdrawals from COMEX).

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