(Kitco Commentary) - In my last writing, I suggested that the gold/silver ratio might have higher to go, but it now looks increasingly like bulls have been crushed by boredom rather than volatility. Metals have been moving sideways since early February - enough to squash sentiment at the same time as stocks rocketed to all time highs.
I am now suggesting that this anticipated correction has/is taking place in time rather than price, with the ratio unable to sustain above lateral resistance, nor its 50 day moving average, with room to roll over again. Daily Timeframe shown below:
The weekly chart shows the same failure to launch in the gold/silver ratio. More specifically, the weekly candle of May 11th formed a hammer setting up the pad, but with noticeably absent follow through. I believe the path of least resistance for the ratio to be a downward sideways one, for the medium term at least.
Simply stated: It's reasonable to think an upward breach of the parallel support/resistance channel shown in the daily chart below (marked with arrow) will lead to a quick run back up into the 5000 - 5200 area. Gold is firmly in its upward trend riding above its 50 day moving average, regardless of the bout of pessimism and apathy currently gripping participant sentiment.
Good luck,
