Silver/Gold ratio working on 7-year breakout!

June 14, 2018

The silver/gold relationship is a key one to watch. Silver is finally outperforming gold and more importantly silver moving up while gold is holding steady (even in the face of good economic numbers and a hawkish Fed). As our friend Chris Kimble, from Kimble Charting Solutions points out this ratio is breaking out of a long-term downtrend line. While this ratio could quickly reverse this is a very good sign for the PM bulls and signifies a potential shift in the PM sector.

Click here to visit Chris’s site for more straight forward market comments.


This chart looks at the Silver ETF (SLV), Gold ETF (GLD) ratio over the past 10-years.

Metals bulls want to see this ratio heading higher and since 2011, the opposite has been happening. The large decline over the past 7-years has this key ratio testing important support, where a long-awaited opportunity could be near.

The ratio has found line (1) as support a couple of times over the past decade. It hit this support line of late and is now working on a breakout of 7-year falling resistance at (2). Historically when this ratio is moving higher, it is sending a positive message to both Silver and Gold.

Below looks Silver Futures over the past 7-years-


Silver has been trading in a very narrow range for the past couple of years, as it is forming a narrowing pennant pattern.

It is now testing 2-year and 7-year break out levels at the same time at (1). If Silver breakouts out at (1), it should attract buyers and push Silver higher.

If you would like to stay on top of opportunities in the Silver, Gold, Miners and Copper markets, we would be honored if you were a Metals Member.

    Jun 14, 2018 14:19 AM

    It would seem that cartels won’t make it easy. What could be obvious is not so obvious when it comes to trading. They will whipsaw both sides and taking early longs to woodshed. That’s just my opinion though. Doesn’t hurt having small starter positions in quality miners.

      Jun 14, 2018 14:47 AM

      The space hasn’t looked this good in 2.5 years and (finally), the bigger risk is in being out of the market, not in it (my opinion, of course).

        Jun 14, 2018 14:34 PM

        I strongly disagree. The miners looked much better prior to October 2017 when the 50 and 100 WMAs were still in bullish alignment.

          Jun 14, 2018 14:41 PM

          Whew, I’m glad we strongly disagree!

            Jun 14, 2018 14:47 PM

            Like I said, I am praying you are right, and I am wrong.

            But to me, there is absolutely no sense in hootin n’ hollerin until the mining stocks are significantly past their declining 100 WMAs for more than a couple of months.

            Jun 14, 2018 14:15 PM

            I think it’s funny that all the bearish opinions, no matter how wrong, are fine but voice a bullish one around here and it’s “hootin’ and hollerin’.”

            The vast majority do a lot of snoozing and losing yet somehow think they’re the winners.

            Jun 14, 2018 14:40 PM

            b proves my point down below. Where’s the attitude toward all the bears who’ve been calling for lower gold and lower miners all year but all blew it? It doesn’t exist yet those guys will probably NOT be “right eventually.”

            Jun 14, 2018 14:05 PM


            Jun 15, 2018 15:05 AM

            Does dropping $20 count as lower gold?
            All perspective I would imagine.

            Jun 15, 2018 15:08 AM

            I do happen to agree, its not a bad idea to be in the pms somehow.
            I wouldnt say there is “risk” being out of the market tho.

            Jun 15, 2018 15:26 AM

            In this context, no, a $20 drop doesn’t count. My comment above referred to all the “expert” calls for much lower prices than 1280 that never happened. Yet those guys get a pass.
            I said that another shakeout would be no surprise a week ago.

            The risk question is obviously a personal one but I’d rather put up with the volatility of this sector than to sit “safely” in cash. Today’s pullback hasn’t (yet) even erased half of my gains from yesterday.

    Jun 14, 2018 14:01 AM

    “the bigger risk is in being out of the market, not in it” I will have to post it on my computer screen 🙂

      Jun 14, 2018 14:06 AM

      Everyone needs a reminder sometimes. 😉

        Jun 15, 2018 15:57 AM

        Great point Matthew & CaliJoe. At this point it makes more sense to be in the market and then add a bit more on any weakness we see in July/August for the rally that usually kicks off in late Aug-Oct. September is a seasonally strong month for the PM miners. I went in heavy on most miners in Nov/Dec last year, especially the few days leading up to that Dec FOMC rate hike, and overall most miners have trended higher during the last 6 months.

        Based on where the PM miner have travel are since ending the 5 year bear market in late 2015, the 2016 surge for 8 months that broke multiple resistance levels, key moving averages, and prior peaks troughs (signalling a major impulse leg and the start of the new bull market) , followed by the boring 2 year sideways to down consolidation, then we really are set up for a nice move higher when the next leg of the bull market gets underway over the next few months. My expectations are for it to continue rallying into 2019, so I don’t see a reason to be totally out of the market at this point, and personally am 95% invested in the Gold & Silver miners I like at this point.

        Wishing everyone a prosperous 2nd half of 2018.

          Jun 15, 2018 15:04 AM

          2 Clarifications:

          1) that second paragraph should have started: “Based on where the PM miners have traveled since end the 5 year bear market in late 2015, the 2016 surge for 8 months…”

          2) I am involved in a number of commodities like Zinc, Copper, Lithium, Uranium, PGMs, etc… beside just Gold and Silver. When I say, “personally I am 95% invested in the Gold & Silver miners I like at this point” I mean for the portion of my portfolio allocated to the monetary metals miners. In addition, there are always other companies I like, but I ‘m diversified across a number of producers, developers, and explorers and will likely make a few swaps once a few underdogs have their day, but at this point I’ve bet on the horses I want to ride for the next leg higher.

            Jun 15, 2018 15:05 AM

            since “ending” (not end) – Good grief I can’t type today….

    Jun 14, 2018 14:07 AM

    I have no doubts about GLD reaching its P&F PO of $152…

      Jun 14, 2018 14:48 PM

      I have no doubt that the Sun will burn itself out too.

    Jun 14, 2018 14:28 AM

    Bullish SILJ is at the 200 week EMA…

      Jun 14, 2018 14:52 AM

      Is it part of bullion banks plan to create a marginal breakout and trap early longs? Every time silver has tried breaking above its 200 EMA, BB steps in and knocks it down. Part of me thinks, this time it would be different. There’s too much pressure underneath the metals to keep it suppressed for any longer.

    Jun 14, 2018 14:08 PM

    I think there is always plenty of legitimate selling to go with any bankster selling at such resistance levels but I agree that is is now time for the sellers to be overwhelmed.

      Jun 14, 2018 14:09 PM

      IPT leads the way as usual:


        Jun 14, 2018 14:10 PM
        Jun 14, 2018 14:29 PM

        IPT is in a beautiful uptrend relative to currencies AND most of its peers.

        Jun 14, 2018 14:27 PM

        IPT is a short anywhere between the 100 WMA and the top of the weekly Ichimoku cloud.

          Jun 14, 2018 14:30 PM

          Yet, you’ll remain long. Correct?

            Jun 14, 2018 14:39 PM

            If I was smart I would have unloaded some of my EXK today. But I didn’t. AG is also approaching its declining 100 WMA soon. They could hang up here for some time, but there will be no significant break above the 100 WMA for probably another year.

            I suppose I am mentally prepared to see the silver miners (the ones that look like EXK, AG and IPT etc on the weekly charts) to break below their 2017 lows in due course and possibly retest their 2016 lows.

      Jun 15, 2018 15:40 AM

      The mid-tier #Silver Producers like $AG $EXK and $FSM have been doing well the last few months. That bodes well for the Silver Jrs if this trend continues.,EXK,FSM&p=2&O=011000

    Jun 14, 2018 14:49 PM

    I just purchased a bit more IPT Tuesday as it looked poised to break out of its range. That was a nice move today on good volume. Hopefully a sign of things to come. Also bought some more USAS today on weakness.

      Jun 14, 2018 14:08 PM

      Watch the declining 100 WMA. I don’t think it will be able to manage to close more than a couple of weeks above that MA. If it can make 4-5 solid closes above that MA, I will reconsider my longer term bearish outlook.

        Jun 14, 2018 14:17 PM

        The perma bulls gotta be right eventually and gold does seem to be having trouble dropping below $1300.

        Jun 14, 2018 14:15 PM

        Thanks Spanky. I am watching that. I hope to sell some at the next peak. Mathew pointed out a head and shoulders pattern on the daily. If things turn back the other way hopefully I will be smart enough to take some off the table. I still see a double bottom as a possibility for ISVLF.

      Jun 15, 2018 15:46 AM

      Charles I’m considering adding to USAS soon as well, because the market seemed to be bummed about their cash flow, but didn’t read into why it was lower. This passage clears up the market misconception, but I’m not sure how many realize how good things will look when they post their 3rd and 4th quarter results.

      Americas Silver Corporation’s (USAS) CEO Darren Blasutti on Q1 2018 Results – Earnings Call Transcript

      “I think the cash balance is something we want to talk about obviously it dropped about $6 million quarter-over-quarter. A lot of that is really just a payment that was missed due to the Mexican holidays around Easter. We had almost $4 million payment for Glencore that was supposed to come in on April 30th it ended up coming in on the 1st of — on March 31st I say ended up coming in on April. The first or late in the night- early of the night of April the 2nd instead. So obviously cash balance looks a little bit lower, but you’ve got a lot of development, CapEx you’ve had all that exploration spending. We repaid debt and we made an option payment on San Felipe.

      So really it’s –and you’ve also seen working capital come down a bit as some of that the long-term debt is processed into shorter term debt as we continue to pay the — take loan from Tech as we deliver terms on it with every shipment. So we’re not concerned about the cash balance. We know it’s going to grow pretty dramatically in the third and fourth quarter. So you know we’re working forward through that, but I don’t think it should be an area of concern for shareholders and it’s certainly not for management at this point”.

    Jun 14, 2018 14:03 PM

    Agreed Spanky. I am keeping my eye on that and may sell some at the next peek just in case.

    Jun 15, 2018 15:37 AM

    Hi Ex –

    Thanks for the post. I have been stalking Americas Silver for a long time. I bought the first time you and Matthew mentioned on this board back before the reverse split. I really like the fact that their zinc credits give their cost for the silver almost to nothing. Obviously from the above post, management is doing the right things in delevering the company too. This thing will eventually have some amazing cash flow. So I am just picking some more up on the dips waiting patiently.