(Kitco Commentary) – Last I wrote, the morning of May 31, I suggested caution was merited in the metals. I cited the gold-silver ratio at critical support, and the probability of its reversal upward, as the main signal to be respected.
Gold-Silver Ratio Analysis
The below weekly chart with the black arrow demarcating the week of May 31 (candle wick formed that Friday afternoon) shows the ratio did turn up and is now approaching overhead resistance.
I suggested some downside targets for gold and silver as well. Silver indeed fell, trading as low as $26.50 last week, from its high of $31.75 on May 31. That said, silver may be finding support right now (weekly chart below), as the gold/silver ratio starts to look toppy. Although the gold/silver ratio does seem to have a small amount of room to move higher, the probability is that silver turns up at its support, as the ratio turns down at its resistance, despite any volatility from here.
Silver Analysis and Trading Opportunities
Additionally, gold has shown remarkable strength, keeping a series of higher lows intact to form what seems to be a rising wedge as shown on the daily chart below.
Gold Analysis and Trading Strategies
The rising wedge pattern in gold may present an opportunity to sell gold and buy silver. While an upside break of the rising wedge would be bullish for gold, the market seems to offer value in favor of silver at this point. Adjusting positions to favor silver could be a strategic move for metals bulls.
Thanks, and good luck.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
