Monday, October 1, 2012

SIL/GDX ratio at new highs

If you look at the chart below you will see that the SIL/GDX ratio is at new highs. The highs 05/01/2012 were broken out last Sept 27. This is clearly bullish long term (i.e. 1-2 years) for the silver miners and confirms silver's relative strength. The trend of the ratio looks impressive.

From this chart I derive the following conclusions:

1. The world is not ending.
2. Hence, silver and its miners glitter more than gold. 
3. Risk "off" seems to be winning the upper hand.
4. This should also benefit stocks.

Here you have the chart. The red line is the ratio. If it goes up, SIL is stronger and GDX (in spite of its bullish trend) weaker.

SIL/GDX ratio breaks out previous highs: Clearly bullish long term


The Dow Theorist

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