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Silver Wheaton Corp. Message Board

  • hapiwondrer hapiwondrer Jan 26, 2014 8:40 PM Flag

    Whence from here?

    According to StockCharts over a 3 year timeframe, the 50 MA and the 200 MA overlay one on the other even as the AU/AG ratio is rising. It’s difficult to get a sense of direction over this, other than the fact that there will probably be a relative change in the MA’s. Recent history has shown a high of approx. 84 in late 2008 for the AU/AG ratio, meaning that silver could continue to underperform as higher AU/AG ratios take place but both could still experience increased prices. The fact that the high occurred in late 2008 relates to the market downturn at that time. Closely monitoring indices such as the DJI and the NYSE, which have had large losses in the last 3 trading days could indicate an impending scenario similar to 2008, but it is too early to make a determination at this point. A week more of continuing losses will indicate a possible near term buy-in for the AG sector when the major indices bottom.

    At some point it would be expected that the ratio will decline indicated by the 50 MA crossing below the 200 MA. This might indicate that AG will gain in price over the performance of AU in a catch-up scenario. The rise of the AU/AG ratio also suggests increasing central bank involvement in AU acquisitions, probably coming out of China. Central banks typically don’t acquire AG because of generally limited storage capacity.

    What this means for SLW is that it will remain somewhat flat to up until there is a decline in the AU/AG ratio, at which point the public will have begun increased presence in the AG market.

    P&F chart does not indicate an objective for a top but suggests a possible impending upward breakout. The GoldPrice AU/AG ratio for 10 years indicates about 84, as mentioned above.

    (AU=Gold, AG=Silver, P&F=Point & Figure chart)

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