Hi-ho Silver!

Around my house, we prefer the old black and white TV shows over what the modern world has to offer our children. The Cisco Kid and the old Robin Hood with Richard Greene get a lot of air time … and, of course, the Lone Ranger.

In all great dramas, the good guy has to fall behind before the triumphant finale. In the silver market, these days, we’ve certainly seen silver fall far behind gold. Silver has a lot of catching up to do.

Just under 5 years ago, an ounce of gold would buy you 32 ounces of silver. Today, an ounce of gold buys you nearly 82 ounces of silver.

In the past 40 years, that’s about as many ounces of silver as you can ever buy with an ounce of gold:

Both gold and silver are down over the five years in question, but silver is down a LOT more than gold. Gold is currently down just 14% in the 5 years while silver is down a whopping 60%!

That’s why you can buy so many more ounces of silver now for each ounce of gold.

Unlike gold, silver hasn’t yet triggered a Re-Entry Rule. The Smart Moving Average on silver has just started to turn up. Since putting in a low in mid-December last year, silver is currently up about 11%.

To trigger a Re-Entry Rule, silver will have to rise another 10% or more from here to just under $17 and the Smart Moving Average will need to continue to move upwards. Silver still has some work to do to prove to me that it’s really going to get up off the mat this time.

My biggest concern about silver (and gold for that matter) continues to be the fact that the commercial interests are selling into the recent rally like desperados. Every time silver has rallied recently, the commercial interests have sold silver into the rally … and they have been correct in doing so as significant new declines have followed each rally.

On the plus side, silver has broken out of a descending wedge and has good support from its Volume-at-Price chart.

And the strongest time cycles for silver are currently another wind in the sails of silver.

With interest rates going negative in many parts of the world the case for precious metals is going up. Gold has taken the lead. Don’t be surprised if silver soon follows.

But be patient. There’s still plenty of time to let the dust settle and see if it’s the good guys that have arrived or just another ruthless group of desperados.

Hi-ho Silver!