The Ratio is Your Friend

June 14, 2012 10:24 am Published by
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By:  John Fisher

For the past 14 years I have traded the gold:silver ratio.  I learned this strategy from a man in the industry who has been deploying the technique for over 30 years.

The strategy?  Simple.  Exchange silver for gold when silver is “expensive”.  Exchange gold for silver when silver is comparatively cheap.  Then, we’ll reverse the trade when the relationship reverses.

The ratio has run-up from 30:1 (30 ounces of silver to buy an ounce of gold) back in early 2011 to 56:1 currently.  Essentially, silver has gotten ‘cheaper’ relative to gold.  

The evidence:  See the short term chart below illustrating a “triple top” at our exchange point currently:

 

The longer term chart below illustrates the support and resistance levels dating back to 2007/2008:

All Things Considered – John’s Commentary:

Expectation:  We are now expecting that silver is beginning to outperform gold.  Profit expectations are up to 54% within the next four months to two years as the ratio approaches 28:1.

Action to take:  Exchange a portion of your gold for silver.  It can be done at low trading costs with no money out of pocket.  We would be happy to explain the strategy in greater detail to determine if it is right for you.  Please contact us.

Quote of the day:  “An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense… that gold and economic freedom are inseparable.”  –  Alan Greenspan