Goldsilverratio
SLV - Finally Catching Up With GoldPrecious metals continue to rocket higher and even as Central Banks around the world flock to gold and lighten up on US Dollar exposure, lagging far behind is silver that is still quite a ways from its all time high close to 50. Reverse head and shoulders formations show some possible targets in the 34-35 area but my best speculative bet is that SLV will hit its previous high, perhaps forming a mega cup and handle formation. For many silver enthusiasts, prices reaching $100-200 seems quite plausible. While it's always best to acquire the physical metal, as the ETFs erode value over time due to management fees, Silver is still cheap in my book. With the gold/silver ratio around 80 and falling, I expect silver to outperform gold going forward.
Dont Buy Silver Here; Watch Gold/Silver RatioSilver has been mostly sideways since 2021 and till 2024, when metal clearly formed a corrective price action because of choppy and overlapping moves. Ideally, that was a very big triangle that sent prices sharply higher this year as shown on weekly chart below. We have seen some nice turn up, due to inflation hedge, CB easing and geopolitical tensions. In fact, we can see some volatility in last few weeks with sharp move out of a big contracting range; its an impulsive reaction since price broke above $25, but notice that price now trades $34-37 area as expected; marked as potential resistance zone identified by swing highs from 2012, 2013, and Fibonacci levels.
The reason why we should be aware of a resistance on silver and also gold, is gold/silver ratio (XAUSD/XAGUSD ), which is pointing higher after an A-B-C corrective setback. Based on past correlations, bullish gold/silver ratio is usually bearish for metals, so if ratio start moving higher, then watch out for a limited upside on silver. From an Elliott wave perspective this push higher on XAUSD/XAGUSD chart would deffinitely not be a surprise because of bullish pattern.
If someone wants to join uptrends on gold and silver, then due to the reasons described above, it may not be a bad idea to wait on some pullback first. $30 can be an interesting levels in such case.
$40 Silver in Sight? BofA Says Yes The Gold-Silver Ratio (XAU/XAG) measures how many ounces of silver are needed to purchase one ounce of gold, providing a clear example of the relative performance of each metal.
Bank of America (BofA) has argued there could be an opportunity to short gold against silver at its current ratio of 83.50, targeting a move down to 78.50 or 75.00, with an upside stop at 87.50.
A decline in the ratio can occur either if silver rises faster than gold or if gold falls more sharply than silver.
BofA’s 2024 gold price targets of $2,368, $2,538, and $2,643 have already been hit, with the next target set around $2,733. However, the bank advises caution on gold, instead hinting traders could focus on silver, which is nearing eleven-year highs. According to the bank, the ratio recently formed a double top, signaling a bullish outlook for silver. Silver’s potential upside targets range between $36.02 and $40.
GOLD is going to start getting much cheaper in SILVER terms.Gold has been on an absolute tear lately as the de facto U.S. corporate government has been printing and spending FRNs (Federal Reserve Notes) into oblivion. As a result, real money is gaining value against the Federal Reserve's monopoly money. Naturally, those who saw the money devaluation coming have been buying gold to preserve their purchasing power, but silver has been lagging behind, even though it has also been appreciating. Although the price of precious metals is, and will continue to be, on the rise, the price of gold is about to get much cheaper in terms of silver. Instead of buying gold, I believe the best move right now is to buy silver, hold it, and once the exchange rate drops to the 35/45 to 1 area, then exchange your silver for gold.
I believe that in the next year to a year and a half, we will see the price of gold cut in half in silver terms, which means it will take half the silver to buy the same amount of gold, effectively doubling the purchasing power of silver versus gold.
Good luck!
What Is the Gold/Silver Ratio, and How Do Traders Use It?What Is the Gold/Silver Ratio, and How Do Traders Use It?
The gold/silver ratio, which measures the relative value of these two precious metals, is a vital tool for commodity traders. Understanding this relationship helps identify market trends and trading opportunities. This article explores how to calculate, analyse, and trade the gold/silver ratio effectively, providing insights to enhance your trading strategies.
Understanding the Gold/Silver Ratio
The gold-to-silver ratio represents the number of silver (XAG) ounces needed to purchase one ounce of gold (XAU). For instance, a value of 70 means buying one ounce of gold takes 70 ounces of the white metal. It’s a valuable indicator of the comparative value between the two precious metals.
Historically, the relationship has seen significant fluctuations. During the Roman Empire, it was around 12:1. In the 20th century, the ratio averaged around 47:1, reflecting changing market dynamics. Recently, it has ranged from above 60:1 to over 90:1, influenced by various economic and geopolitical factors.
A high figure suggests that silver is undervalued relative to gold, indicating a potential buying opportunity for XAG or a selling opportunity for XAU. Conversely, a low figure implies that silver is overvalued compared to gold. Traders often use this metric to make strategic decisions, such as going long on XAG and short on XAU when the ratio is high, expecting it to revert to historical averages.
It’s also a reflection of market sentiment. When economic uncertainty is high, gold, as a so-called safe-haven asset, may increase in value relative to silver, widening the proportion. Conversely, silver may outperform the yellow metal during economic stability due to its industrial uses, narrowing the differential.
Recent History of the Gold/Silver Ratio
The historical gold/silver ratio has experienced significant fluctuations driven by global economic events. During the 2008 financial crisis, it spiked to over 80:1 as investors flocked to gold as a so-called refuge asset. It then fell sharply, reaching a low of 32:1 as central banks rolled out stimulus measures to support growth.
In 2020, amid the COVID-19 pandemic, the ratio reached an all-time high of 126:1 due to heightened economic uncertainty and gold's appeal as a so-called safe-haven asset. However, as economies began recovering and industrial demand for the white metal increased, the relationship narrowed, dropping to around 65:1 at the beginning of 2021. Key drivers included expansionary policies and the recovery of industrial activities linked to silver demand.
Interested readers can use FXOpen’s free TickTrader platform to explore the historical performance of these two precious metals.
Calculating the Gold/Silver Ratio
Calculating the ratio is straightforward. Simply divide the current price of gold by the current price of silver. For example, if XAU is priced at $1,800 per ounce and XAG at $25 per ounce, the calculation is:
$1800/$25 = 72
This means it takes 72 ounces of silver to buy one ounce of gold. However, traders don’t need to calculate this themselves; TradingView users can enter ‘FXOpen:XAUUSD/FXOpen:XAGUSD’ into the ticker search to display the gold-to-silver ratio chart.
Factors Influencing the Gold/Silver Ratio
The gold/silver ratio is influenced by various factors that affect the value of these two precious metals. Key factors include economic indicators, market sentiment, and geopolitical events.
Economic Indicators
Inflation rates, interest rates, and economic growth directly impact the relationship. High inflation typically increases demand for gold as a hedge, widening the relationship. Conversely, low inflation can favour the white metal due to its industrial uses, narrowing the proportion.
Interest rate changes also play a crucial role. When interest rates rise, gold often becomes less attractive compared to interest-bearing assets. Economic growth similarly boosts industrial demand for silver.
Market Sentiment
Investor sentiment towards risk significantly affects the measurement. During periods of economic uncertainty or market volatility, investors flock to gold for its so-called refuge properties, increasing the ratio. For instance, during the COVID-19 pandemic, heightened uncertainty led to a surge in XAU, pushing the ratio to record highs. Conversely, in stable economic conditions, silver's industrial demand can outpace the yellow metal.
Geopolitical Events
Political instability, trade wars, and other geopolitical events can cause fluctuations in the proportion. For example, tensions between major economies or unexpected geopolitical crises often drive investors towards the yellow metal. On the other hand, the resolution of such conflicts or stable geopolitical environments can boost industrial production and demand for silver and narrow the relationship.
Supply and Demand Dynamics
Silver's dual role as both a precious metal and an industrial commodity makes it more susceptible to supply chain disruptions and changes in industrial demand. Gold, primarily seen as a store of value, is less affected by industrial demand but highly influenced by investment demand and central bank policies.
Trading the Gold/Silver Ratio
Trading this relationship involves leveraging the relative price movements of each asset to make strategic trading decisions. Various strategies can be employed to capitalise on this ratio, each offering unique opportunities depending on market conditions.
Strategies Based on Trends
Traders often monitor the trend of this metric and the individual trends of each metal to determine potential trading signals:
Gold-Silver Ratio Uptrend
- General Uptrend: In this scenario, both assets are rising, but the ratio is also increasing, indicating gold is outperforming silver. Traders may buy XAU, expecting it to continue its relative strength.
- General Downtrend: When both metals are falling, but the ratio is rising, silver is underperforming. Traders may sell XAG, anticipating further weakness compared to XAU.
Gold-Silver Ratio Downtrend
- General Uptrend: If both metals are rising and the ratio is falling, silver is outperforming gold. Traders might buy XAG to capitalise on its relative strength.
- General Downtrend: When both metals are declining and the ratio is falling, gold is underperforming. Traders may sell XAU, expecting continued relative weakness.
Trading Extreme Highs and Lows
The gold/silver relationship is generally deemed ‘fair’ when the figure is around 50, implying that neither metal is overvalued/undervalued relative to the other. However, it can reach historical extremes, providing additional trading opportunities:
Historical Highs (80-100)
- Uptrend in Both: When the ratio is historically high, gold is considered expensive compared to silver. If both metals are in an uptrend, traders might long XAG, expecting a correction in the metric as it catches up.
- Downtrend in Both: If both metals are declining, traders might short XAU, anticipating a relative decrease in its value compared to XAG.
Historical Lows (40-60)
- Uptrend in Both: When the ratio is historically low, gold is viewed as cheaper relative to silver. In an uptrend, traders might long XAU, expecting it to rise.
- Downtrend in Both: If both metals are falling, traders might short XAG, anticipating it will continue to lose more value compared to XAU.
The Bottom Line
Trading the gold/silver ratio can unlock unique opportunities in the market. By understanding its dynamics and employing strategic approaches, traders can potentially enhance their trading strategies. To start trading this unique relationship via CFDs, consider opening an FXOpen account to access a wide range of advanced trading tools and resources to support your strategies.
FAQs
What Is the Gold-to-Silver Ratio?
The gold-to-silver ratio measures how many ounces of silver are needed to purchase one ounce of gold. It provides insights into the relative value of these precious metals. A high figure suggests silver is undervalued relative to gold, while a low number suggests the opposite.
How to Calculate the Gold-to-Silver Ratio?
To calculate the ratio, divide the current price of gold by the current price of silver. For example, if gold is priced at $2,000 per ounce and silver at $20 per ounce, the proportion is $2000/$20, or 100:1. This means one ounce of gold costs 100 ounces of silver.
Why Is the Gold/Silver Ratio So High?
The ratio can be high due to factors like economic uncertainty, increased demand for gold as a so-called safe-haven asset, and reduced industrial demand for silver. Since 2021, it has remained elevated above 75:1 due to ongoing market uncertainties.
How to Trade the Gold/Silver Ratio?
Trading the relationship involves examining the trends of both assets and comparing their performance to the metric. Traders often buy silver and sell gold when the number is high, expecting it to decrease. Conversely, they sell silver and buy gold when the figure is low, anticipating an increase.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
SILVER RELATIVE TO GOLD/SILVER RATIO - 3 possible deep correction.
target price : 20.50$/oz.
trade invalidation level : daily close above 33.00$/oz.
good luck.
Why longer term charts are importantI took a look at the weekly gold/silver ratio and noticed a few significant patterns. For example, there was a notable acceleration downward following the break of a 3-year uptrend a couple of weeks ago. Additionally, there is support at the 74.65/63 level, which has been in place since January 2022.
This observation reminded me of the importance of examining long-term charts, regardless of your trading time frame. Longer-term charts provide essential context and clarity that short-term charts often lack.
Why everyone should be looking at longer term charts:
1. Identifying Trends
Long-term charts help in identifying significant trends that might not be visible in short-term data.
2. Smoothing Out Volatility
Short-term data is often noisy, with frequent fluctuations that can obscure the underlying pattern. Long-term charts smooth out this volatility, providing a clearer picture of the fundamental movement and reducing the influence of random, short-term events.
3. Contextualizing Current Movements
Long-term charts place current price or economic movements in a broader context. This helps investors and analysts understand whether a recent change is part of a larger trend or not.
4. Historical Comparisons
These charts allow for comparisons with past periods, making it possible to identify cycles, recurring patterns, and historical precedents. This historical perspective can be invaluable for forecasting future movements and making informed predictions.
5. Assessing Risk and Reward
By examining long-term performance, investors can better assess the potential risks and rewards of an investment. Understanding how an asset has performed over various market cycles helps in evaluating its stability and growth potential.
6. Avoiding Emotional Bias
Short-term market movements can evoke strong emotional responses, leading to impulsive decisions. Long-term charts provide a more detached view, helping investors stay focused on long-term objectives and avoid reacting to short-term market noise.
Conclusion
In summary, long-term charts offer a comprehensive view that is critical for understanding trends, reducing noise, contextualizing current events, making historical comparisons, assessing risk, avoiding emotional decisions, developing strategies, and analysing economic cycles. They are an indispensable tool for anyone involved in financial markets or economic analysis, providing the clarity and perspective necessary for informed decision-making.
Disclaimer:
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GOLD continues to outperform SILVER On this chart the ratio of spot gold to spot silver is charted over time. The traditional
benchmark of 75 is the horizontal black line on the chart. Above it gold is outperforming
while below it gold is underperforming. Direction counts. Overall gold has been rising
relative to silver since May 23. Gold did underperform as compared with silver from September
22 to the end of 2022. Silver last had any outperformance, in gold's trend down
which briefly lasted from mid-March to May of 2023. Silver has considerable industrial
uses compared with gold. At present, the ratio is rising making gold the better choice
if trading or investing in these to metals for the intermediate or long term. This is especially
true because central banks are accumulating gold most especially China whose ambition is
to launch a gold-backed new currency.
Inflation, and the coming SILVER PRICE EXPLOSION! As central banks around the world are losing their grip on baskets full of fiat currencies, real, tangible commodities like Gold, Silver, Platinum and Palladium are going to make an incredible run. There are three metals related to monetary systems throughout history: gold, silver and copper. So far we've seen gold pull ahead in the running, but soon silver will running it down with veracity!
Good luck, and always use a stop-loss!
Finally Bulls Take Place on SilverI know it's very annoying to trade with silver in these days, but price is at the bottom right now. Silver is oversold and undervalued. Price in Falling Wedge Pattern and if the price exceeds 23.20 with volume, there will be a breakout. There is a Double Bottom Pattern on Chart which means bulls are powerful in 22.5 area. So there is only one way from here. I expect the price to stay inside this giant Triangle for at least 6 months. Trade accordingly.
Formed Patterns : Triangle Pattern, Falling Wedge, Double Bottom
Scenario 1 : Silver quickly rises to 25.364-25.560 levels and rebounds to the 22.7-23 levels.
Scenario 2 : Silver consolidates next week and rises to 25.364-25.560 levels, then rebounds to the 22.7-23 levels.
Price Target in Long Term : $44
Support Level : 22.51-22.97
Macroeconomic Situation : * Due to the American debt crisis and interest rates will soon fall; individual investors, companies and central banks continue to buy gold/silver.
* The crisis in the Middle East will push the Gold/Silver even higher.
* Due to many issue of US Dollar, I expect DXY will fall which is good for Gold/Silver.
Big Bullish Trend has BegunSilver is oversold and undervalued now. Falling Wedge broke upwards and started the bullish trend. On the weekly chart, the 21-day SMA will cross the 50-day SMA next week. It means a major bullish trend will begin with expected break of 676-day major Triangle. I also expect a big decline on Gold/Silver Ratio and DXY which is good for silver.
Formed Patterns : Triangle Pattern, Falling Wedge
Price Target in Long Term : $44
Support Level 1 : 22.931-23.066
Support Level 2 : 22.51-22.97
Macroeconomic Situation : * Due to the American debt crisis and interest rates will soon fall; individual investors, companies and central banks continue to buy gold/silver.
* The crisis in the Middle East will push the commodity market even higher.
Silver is Close to Breaking Big Triangle PatternSilver is close to breaking the 665-day Triangle Pattern. Silver is oversold and undervalued now. They have tried to reduce the price in volume for 2 days, but the price does not accept below 23. From now on the only direction is up. I also expect a big decline on Gold/Silver Ratio. Downtrend on DXY to continue and gold to perform well this week which is good for silver.
Formed Patterns : Triangle Pattern, Ascending Channel
Scenario : Silver hits the 27.5-28 levels and begins consolidation at 25.5 levels.
Price Target in Long Term : 44
Support Level : 22.51-22.97
Trend Power : Extremely Bullish
Macroeconomic Situation : Due to the American debt crisis and interest rates will soon fall; individual investors, companies and central banks continue to buy gold/silver.
Gold/Silver Ratio will Break the 375-day Triangle Pattern SoonGold/Silver Ratio will break the 375-day Triangle Pattern soon. There was a false breakout to the upside last week. Price couldn't break the trend line. Gold/Silver Ratio is expected to go down.
Formed Patterns : Shooting Star Candlestick Pattern, Rising Wedge Pattern, Double Top Pattern on the momentum indicator.
Scenario 1 : Gold/Silver Ratio quickly goes to 76 levels.
Scenario 2 : Gold/Silver Ratio hits 81.58 and retreat to the 86. And then goes to 76.
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Gold / Silver and what it means for SilverSilver is losing to gold as it has been for months, but we're getting close to the gold/silver ratio of 98-100 area. At that point this chart should reverse which likely means - Gold starts getting a bid and Silver starts to outperform Gold. So yeah this ongoing dip might be the one to buy for long term, but keep in mind this can go on for a few more months.
GOLD ⚔️ SILVER🥇XAUXAG🥈 heading to strong resistance level. It's confluence of trendlines and 50% fib retracement of the initial impulse breaking the major uptrendline. I expect backtest of it and possible reversal which would be bullish for both metals.
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⚠️Disclaimer: I'm not financial advisor. This is not a financial advice. Do your own due dilingence.
$SILVER - SILVER IS STUCK?$SILVER
Is in an Interesting Place right now.
Stuck between Resistance and Support.
What is its next move?
Must we get another move down, the blue line would be the optimal entry price.
#Silver
Check my Linked Idea to Gold/Silver Ratio, suggesting that silver might break this important resistance line.
$GOLD / $SILVER RATIO INDICATING RISK ON!No one has talked about this one yet but I think it's huge!
$GOLD / $SILVER RATIO.
A 2.5 Year Broadening wedge breaking down. Indicating that Silver (risk) is going to outperform Gold (safety).
That doesn't happen in a financial crash.
How to “invest” silver with gold/Silver ratio. 6/Oct/22Gold/Silver chart ratio normally used by hedge fund to “Swift” within “Silver” or “ Gold” assets. They usually “treat” ratio of >=100 as buy silver instead of gold vice versa for below <= 50..Instead of follow 50-100 rules. Traders could “read” gold/ratio chart spotting where its “support/resistance” located and decide to “hold” silver or gold.
