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What Are the Silver to Gold and Platinum to Gold Ratios Indicating?

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Take a look at some technical analysis of gold, silver, and platinum.

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Now, let us compare gold and silver to see which one's likely to outperform the other in the weeks to come.



In the very long-term silver to gold ratio chart, we see that the ratio has consolidated for a few months; with a rising resistance line and declining support line, the situation is inconclusive. If the RSI is taken into account, however, it seems likely that a local bottom was seen recently, and a bet on silver's outperformance in the coming weeks seems to be a good idea today.

Finally, let's take a look at the platinum's performance relative to gold.


Click to enlarge

An important event was seen recently as the ratio broke out above the very long-term resistance line. This is visible here and it seems that a rally back to the values seen in previous years will likely be seen once again. We realize that this is a very broad target; however, if you consider the trading range during the previous 20 years, you will see that this means a significant upside from today's values.

For over a year now (with a short exception), the ratio has held below the 1.0 level, meaning that platinum was cheaper than gold. This is not something that is often seen if you focus on the last 20 years. We expect this situation to reverse in the months ahead and we are quite bullish on platinum. The long-term cyclical turning point has once again worked out very well, closely aligned with a major bottom.

Please note that platinum is currently part of our suggested precious metals portfolio (and that's been the case for several months now).

Summing up, the bottom has likely been reached for gold and the situation remains bullish for the weeks ahead. The bullish situation in the gold market combined with the situation in the silver to gold ratio chart indicates a bullish outlook for the white metal. Another noteworthy factor is the oversold situation in the silver to gold ratio and silver having just bottomed close to its cyclical turning point. The long-term outlook is a bit more bullish than not, and our view is that long positions in silver are justified at this time. We don't see the $1 trillion platinum coin idea coming into life, but the platinum to gold ratio suggests that the yellow metal may be outperformed in the near future.

Thank you for reading. Have a great weekend and profitable week!

For the full version of this essay and more, visit Sunshine Profits' website.

Twitter: @SunshineProfits
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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