Lots of conjecture surrounds the drop in precious metals, as well as the gold and silver miners. It feels like we've gone beyond rotation and into liquidation, some of it forced. If this is the case, we'll see downside beyond what most traders feel is rational, then a sharp bounce. I've been searching for clues as to where and when this bounce could occur, specifically on the metals themselves rather than the miners.
Often I see traders rationalize a gold long or short position due to its relative ratio against the price of silver. The same rational can be used to justify a silver position, but this is often done as a pair trade where a trader is long one while being short the other awaiting some reversion to the mean. I am taking a slightly different approach here. I am charting not only the ratio of the SPDR Gold Trust (GLD) to the iShares Silver Trust (SLV), but also plotting some momentum technicals as well as the underlying price movement of the exchange-traded funds denoting GLD with a gold line and SLV with a silver line. It seemed appropriate....276 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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