Gary Christenson: Six of eight significant silver market lows in the past 23 years occurred when the GSR (gold to silver ratio) was > 64 and the RSI (Relative Strength Index (link) of the GSR was < 35.
Silver, in late June and early July 2013, met the above criteria, along with a near record low RSI of the GSR, and a record low in the TDI Trade Signal Line. These are strongly bullish conditions.
Previously, two other important lows occurred about 4.7 years ago, and 9.2 years ago. Both of those lows were followed by explosive rises that took silver prices much higher. The June/July 2013 low looks similar to the 2004 and 2008 lows. We will see if the upcoming rally is similarly explosive or not.
- October 2008: $8.53 to nearly $50.00
- May 2004: $5.50 to about $21.00
Much has been made of the gold to silver ratio. It is currently (August 8, 2013) about 64, with gold about $1312 and silver about $20.41. After examining the data for the GSR for the past 23 years, we find that:
- The highest ratio was about 102 in February of 1991. (silver very low)
- The lowest ratio was about 32 in April of 2011. (silver quite high)
- The average ratio (weekly closes) since 1/1/1990 has been about 65.
- The average ratio for the past 10 years has been lower at about 58.
All significant price lows in the past 23 years occurred at (GSR) ratios greater than 64. However, a better indicator of significant lows is the Relative Strength Index of the GSR based on 21 weekly closes combined with the GSR.
Not all significant lows were marked by HIGH ratios and a LOW RSI of the ratio. But, a high ratio along with a low RSI were strongly indicative that a significant price low had just passed (typical) or was due very soon. The low in the RSI usually occurs about two weeks after the actual price low. Think of this as confirmation of the price low.
July 05, 2013 had a silver low of $18.73 (weekly close – actual low was in June). Silver had fallen 46% in 9 months since a temporary high of $34.57 in October of 2012.
about 4.7 year earlier:
October of 2008 marked a silver low of $9.29 (weekly close – actual low was $8.53).(...)Click here to continue reading the original ETFDailyNews.com article: Technical Indicators Point To A Bottom In Silver PricesYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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