Gold:Silver Ratio Weekly Chart

This chart helps answer your question as to whether it is better to own gold or silver. When the gold price is outperforming the silver price, the ratio climbs higher.  When silver outperforms gold, the ratio moves lower.  The gold arrows show the periods where gold outperformed silver, the gray arrows show where silver outperforms gold. Gold outperformed silver after the Dotcom Bubble popped in 2000, then as the bombs dropped to start the Iraq War in March 2003, look at how silver outperformed gold for the following four years into 2007. As the Financial Bubble popped and markets moved towards the 2008 Market Crash, gold was outperforming silver. Trader's had the vibe that trouble was afloat and started to run towards gold to provide some safety.

At the March 2009 market bottom that occurred due to QE1, silver started to outperform again and the uber strong performance of silver is notable from 2009 into early 2011. Silver shot up to 50 bucks before back peddling.  Do you notice a pattern in the chart above?  When the ratio moves up towards 80, 90 and 100, that shows the outperfomance of gold is ending and a flip to silver outperformance is beginning.  Conversely, when the ratio moves down under 50, 45, and lower, this shows that silver has gotten too big for its britches and that gold will start to outperform its gray sister. After the Fed announced Operation Twist and then the ECB started pumping with LTRO 1 and 2 last Fall, note the outperfomance of gold over silver beginning once again.

In the very near term, however, the red rising wedge, overbot conditions and negative divergence, spanked the ratio down, which creates the outperformance of silver over gold that you saw in recent days. The indicators are weak and bleak wanting to see some further lows in the ratio, but the money flow is somewhat constructive moving foward. The ratio is at 51 near that 50-ish line that typically identifies a time where gold will start to outperform silver once again.  Thus, the projection is that some further move downward in ratio should occur, so silver will have an edge over gold in the days, perhaps a few weeks forward, however, overall, in the bigger picture and time frame, the long gold arrow should continue higher and gold shold outperform silver in the monthly time frame and for the next few years ahead, until the ratio can work its way back up towards 80 and higher. So, take advantage of some recent and near term silver outperformance, then the rotation can occur to weight the PM holdings more in favor of gold for the longer term. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.