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KDave

Silver indicating potential price falls for both metals

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An excellent article by the formerly bullish Christopher A. (from iGold Advisor)

http://www.silver-phoenix500.com/article/silver-price-forecast-continued-lagging-signals-caution

Worth a read. My view is that I would very much like to see falling metal prices, but the flip side is if we do, it means it could continue for decades. 

"A rising gold to silver ratio, when gold is outpacing silver, tends to correspond with falling prices for both metals, as investors seek safety in gold"

The suggestion is we are potentially in the modern equivalent following 1982 which appeared bullish (2016) but was followed by over a decade of poor performance in the metals. Perhaps this is how platinum will regain its historic ratios with the other metals - not from rising prices, but from falling the least, acting as a hedge against gold. 

What are you thoughts please?

 

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7 minutes ago, KDave said:

An excellent article by the formerly bullish Christopher A. (from iGold Advisor)

http://www.silver-phoenix500.com/article/silver-price-forecast-continued-lagging-signals-caution

Worth a read. My view is that I would very much like to see falling metal prices, but the flip side is if we do, it means it could continue for decades. 

"A rising gold to silver ratio, when gold is outpacing silver, tends to correspond with falling prices for both metals, as investors seek safety in gold"

The suggestion is we are potentially in the modern equivalent following 1982 which appeared bullish (2016) but was followed by over a decade of poor performance in the metals. Perhaps this is how platinum will regain its historic ratios with the other metals - not from rising prices, but from falling the least, acting as a hedge against gold. 

What are you thoughts please?

 

And I thought my Crypto going down faster than the Titanic was the worst thing that could happen! 

Edited by Mariner1961

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I have had a niggling thought myself about the gold silver price, they both have been grinding side ways for far to long esp silver. Gold at least has gone up as a safe haven hold.  It would not surprise me if gold held its price then capitulated slowly but not as fast as silver I hope not. 

If we see the ratio not coming down after November then I will have to start adjusting my investment.

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12 minutes ago, Thelonerangershorse said:

By "small" you mean no nukes?

I don't envision nukes getting used in Syria, there's just nothing important enough there to justify it.

The only scenario for nuclear use I can see is where there's a carefully calculated low risk of escalation. e.g. defending against a direct territory violation that threatens vital assets.

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if history rhymes then in both cases ~1985 and the recent

trends, gold has risen from this point for maybe 1-2 years

so there's no hurry to sell just yet. I think the silver move

in ~1987 was important to what happened after that.

 

HH

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Gold testing overhead resistance and leading the sector higher. 

Chris A. is right to discuss the possibility of lower prices, but from my view we are still in the very early stages of a bull market. You can also make the argument that the GSR shows how unloved the PM sector is. People have very short memories - last time the GSR was up at these levels in early 2016 the following few months were very strong indeed. 

Edited by vand

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5 minutes ago, vand said:

Gold testing overhead resistance and leading the sector higher. 

Chris A. is right to discuss the possibility of lower prices, but from my view we are still in the very early stages of a bull market. You can also make the argument that the GSR shows how unloved the PM sector is. People have very short memories - last time we were up at these levels in early 2016 the following few months were very strong indeed. 

Vand you are quite right to point this out (bull market theory),

KDave has pointed us to a Christopher Aaron article (who is usually a Gold Bull) who is trying to predict the future with with the help of historical chart or form. Something we all do, it is how we read the charts and remember we only have the past to predict the future.    I think Christopher Aaron must of done a lot of research before putting this article out as he is not preaching to his congregation on this and it comes across as a watch out this may happen, rather than you can make so much if you carry on the same and gold/ silver is going to make big profits which you get a lot of with some article writers though not with Christopher A. 

Gold vs commodities   IMO Gold is expensive compared to commodities, that includes copper, silver, platinum this does not mean the other metals will increase in value it could mean all the metals could decrease in real terms.  It is a possibility one has to take into account .  Gold is a safe haven play and is real money on a long term hold though you can lose money. Gold could increase in value or stay the same value while silver decreases all of this has to come into play.  Plus there is new mining technology that makes mining cheaper that is tricking down from the very big mines.  

I am glad Christopher A put this article out, I will be watching the Gold/silver ratio closely             

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Yes the interesting point for me was the historic examples of a high GSR leading to falls in the price of both metals during its contraction. I have done a lot of research into the GSR and I actually came to the conclusion that a high GSR is a good time to buy both metals and a low GSR a good time sell both, but Mr Aaron's evidence suggests this theory is not always right in the following example:

When gold is leading silver towards a higher GSR, this can lead to falling prices of both metals.

So a high GSR is not always bullish. I think to protect against this we should look to other commodities. Platinum would be a good example, which has some strong cases for and against discussed elsewhere on the forum. If silver and gold fall it would give platinum the opportunity to revert nearer to its historic norms, either by not falling, or by raising in value relative to gold and silver. Insurance against falling gold in this specific scenario. Alternatively it may offer no protection at all.

The gold to oil ratio has been broken for a long time, but with the recovery in oil over the past year, perhaps it is time to assume that such historic commodity ratios will begin to revert. I need to look into this further.

I say all this in the context that I believe commodities to be the only undervalued thing left to buy, unless you believe things like this https://seekingalpha.com/article/4162080-forward-p-e-says-stocks-now-fair-cheap?ifp=0.

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I continue to think that the GSR has no predictive value. It is high when gold and silver are both cheap, and lower when both are expensive, but it is not a leading indicator. It does not indicate that prices are about to rise or fall. To say, buy gold and/or silver because the GSR is high, amounts to saying nothing more than buy gold and/or silver because they are cheap. Cheap relative to what? By what measure? The GSR could go to 100 or more; it will not tell you when to buy. Nor is there any natural value for it, such as the historic 16 of the bimetallic standard, or the 9 which is reported as the ratio at which silver and gold are produced.

I don't see any strong evidence of a large breakout for gold or silver. Stock investors are not deserting the stock markets in large volumes: when they do you will see bond prices rise, precious metals rise and cryptos rise. We have not seen this in the last three months, despite the correction in stocks. Gold is seasonally weak at this time of year. Barring geopolitical events, we are unlikely to see gold move up again until August/September.

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8 minutes ago, Bumble said:

Gold is seasonally weak at this time of year. 

Depends on which year :P

Relative prices are a good place to look to determine if the GSR is useful. At the moment I understand that when the GSR is high buy, low sell. It is atrocious in regards to timing, but over long time frames, if you are talking decades, you will rewarded for buying high and selling low. What other investment can you say that about. :P

I will go and have a look at what prices were in housing broad stocks and commodities and get back to you as to relative value. I will do the same for the lows and the previous high in 1980 and see if there is a correlation or not at the peaks and troughs. It might be that gold and silver are cheap and expensive relative to differing assets each time, which would be interesting and might have some predictive power as to where to stash the proceeds at the next low.

Out of interest what do you consider as a leading indicator for the metals? 

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If there were a reliable leading indicator for the gold price, I would be rich. In very general terms, the leading indicator for a rise in gold price is war, because wars are expensive and countries print currency to pay for them, and eventually all that extra currency shows up as price inflation. But the effects of wars can take years to appear. In the somewhat shorter term, gold rises when inflation-adjusted interest rates are low, or when investors are nervous and want to hold a safe haven asset. Gold is correlated with index-linked bonds, because both are safe haven assets that are desirable when inflation-adjusted interest rates are low. But if you want short term trading signals, I doubt there are reliable ones. You could try watching the moving averages for gold itself, or for the USD, but gold reacts largely to investor sentiment and expectations, and I'm fairly sure it is manipulated.

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5 hours ago, Bumble said:

I continue to think that the GSR has no predictive value. It is high when gold and silver are both cheap, and lower when both are expensive, but it is not a leading indicator. It does not indicate that prices are about to rise or fall. To say, buy gold and/or silver because the GSR is high, amounts to saying nothing more than buy gold and/or silver because they are cheap. Cheap relative to what? By what measure? The GSR could go to 100 or more; it will not tell you when to buy. Nor is there any natural value for it, such as the historic 16 of the bimetallic standard, or the 9 which is reported as the ratio at which silver and gold are produced.

I don't see any strong evidence of a large breakout for gold or silver. Stock investors are not deserting the stock markets in large volumes: when they do you will see bond prices rise, precious metals rise and cryptos rise. We have not seen this in the last three months, despite the correction in stocks. Gold is seasonally weak at this time of year. Barring geopolitical events, we are unlikely to see gold move up again until August/September.

GSR may not be predictive in your mother currency, but it can be predictive if you are purchasing gold or silver, with silver or gold.  If GSR is high there is probably money to be made buying silver with gold, and when low buying gold with silver.

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9 minutes ago, Bumble said:

If there were a reliable leading indicator for the gold price, I would be rich. In very general terms, the leading indicator for a rise in gold price is war, because wars are expensive and countries print currency to pay for them, and eventually all that extra currency shows up as price inflation. But the effects of wars can take years to appear. In the somewhat shorter term, gold rises when inflation-adjusted interest rates are low, or when investors are nervous and want to hold a safe haven asset. Gold is correlated with index-linked bonds, because both are safe haven assets that are desirable when inflation-adjusted interest rates are low. But if you want short term trading signals, I doubt there are reliable ones. You could try watching the moving averages for gold itself, or for the USD, but gold reacts largely to investor sentiment and expectations, and I'm fairly sure it is manipulated.

I don't know that we have a long enough price history for gold to know one way or the other, long term.  I mean long term all paper fiat goes to zero, we know that because of the literally thousands of currencies that have been destroyed over the history of humanity, so in that sense gold is always a better bet.  But in the U.S. dollar, for example, we only have a market price for gold of about 50+ years to go on, and before that we were on some sort of gold standard, so we really just don't know what happens to the price of gold.  I agree war is bullish for gold because in times of low amounts of trust countries who won't accept debt will only settle in precious metals and other commodities.

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