Gold/Silver Ratio vs. Equities

 

Here's a different look at the gold/silver ratio, via a chart of the S&P500 vs. the silver/gold ratio (effectively an inverted gold/silver ratio to show the current contrast vs. equities):

 

History suggests that 1. the silver/gold ratio should rise (same as gold/silver ratio falling) and 2. it should get back in line with equities.  

 

There's several ways that could happen.  The most likely two are that equities drop while the silver/gold ratio drops by a lesser degree or that equities drop while the silver/gold ratio rises.  Far less likely is that both rise with the silver/gold ratio rising at a relatively faster pace.  Other scenarios exist, but aren't worth discussing here. 

 

Whichever of the various possible scenarios will eventually play out, we feel confident it'll involve equities dropping.

 

Next week the U.S. Federal Reserve has a two-day meeting starting Tuesday, with the related announcement coming at 2PM EST on Wednesday.  The Bank Of Japan makes its next pronouncement on Tuesday, March 15. 

 

Both events could cause volatility in equities and metals.  Today the European Central Bank made its pronouncement which resulted in a very wild ride to nowhere in the DJIA (a 309-point swing from high to low and a close down just 5 points on the day), as well as a modest bump higher in gold and silver. 

 

 

 

 

 

 



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