My research team and I started exploring the relationship between the Gold-to-Silver ratio and the S&P 500 to find trends in Metals and the US Stock Markets. We called the collapse in the Gold-to-Silver ratio accurately back in March 2020, and we believe the current setup in the S&P to the Gold-to-Silver ratio shows the move in Precious Metals is far from over.
PLAYING WITH RATIOS – WHAT CAN WE LEARN
The Weekly Gold-to-Silver ratio chart below highlights our predictions from late March 2020 where we suggested the incredible spike in the ratio value was similar to the spike that took place in 2008. We identified a Flag/Pennant setup after each spike in the ratio volume and predicted a downward ratio decline would continue – pushing both Gold and Silver higher. We also suggested that Silver would begin to rally much faster than Gold throughout this move.
METALS MAY RALLY 350% TO 750% FROM CURRENT LEVELS
Now, with the Gold-to-Silver ratio sitting near 69.50, we believe another important ratio component has come into play for Precious Metals – the S&P to Gold-to-Silver ratio. If our earlier research continue to be correct, then the Gold-to-Silver ratio should continue to decline targeting levels near or below 50 at some point over the next 3+ years.
We believe this process may take place in a very transitional global stock market. When we suggest this term “transitional”, we are suggesting a very fluid and aggressive global stock market where capital will actively move from risks to opportunities very quickly. As the global environment shifts from stability to moderate crisis over the next 3+ years, we believe more and more capital will attempt to find safety in Precious Metals and other safe-havens.
The one thing that is really starting to concern me is the news and talk that the riots and protests in the US may get much worse over the next 6 to 12+ months. From a technical standpoint, it is very difficult to define technical indicators that attempt to quantify the effect of these riots and destruction to local economies. Although, we do have one technical analysis component to rely upon – price – since it always discounts external factors faster than the news can print stories. Because of this, we believe the new ratios we are sharing with you today are very important.
Please take a look below at our new Monthly ratio analysis of the SPX500 to the price of Gold. We believe this ratio chart highlights how global investors are moving away from safety, shown with rising ratio levels on this chart, and back into safety/metals, shown with declining ratio levels on this chart. Let’s take a look at a bit of history.