As you know I've been long silver as of Tuesday and you can read about the reasons why I am bullish by clicking here.
Since Tuesday silver has rallied sharply and I am still holding onto my long position.
I've received a few emails asking why I seem to be more bullish on silver than on gold. Well first of all let me say that I think both gold and silver will rally but I think silver will be the metal that rallies the most.
If you look at the above chart you will see a 4 year weekly chart of the silver/gold ratio. A rising ratio line means silver is outperforming gold while a falling ratio line means silver is under performing gold.
In the lower pane is the stochastic oscillator. Every time this oscillator has moved below the buy line and turned up, silver has outperformed gold. This indicator has been 100% correct over the last 4 years on it's buy signals which I think is amazing.
Right now the stochastic oscillator has crossed upwards confirming yet another buy signal. So as you can see, the above chart is the reason why I am more bullish on silver than on gold. I'm looking for this ratio to make new highs. I hope this clears things up..We'll see in the weeks to come if this analysis is indeed correct.
Saturday, June 02, 2007
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