Silver Price Analysis - 10 Year Cycle - Part 2

(This post contains charts originally hosted at:

http://silverprice.org/silver-price-history.html

http://goldprice.org/gold-price-history.html and

http://goldprice.org/gold-silver-ratio.html)

When I started investing in precious metals, I religiously tracked the price on these websites:

http://www.goldprice.org/gold-price.html

http://silverprice.org/silver-price-per-ounce.html

While both had good, real time updates on metal prices, I've since taken to use these websites to track the price because of some of the enhanced analysis tools they have:

http://www.24hgold.com/english/gold_price_in_canadian_dollars.aspx and

http://www.netdania.com/Products/live-streaming-currency-exchange-rates/real-time-forex-charts/FinanceChart.aspx?m=c

Some charts on goldprice.org and silverprice.org that I will focus on today are the historic gold, silver, and gold:silver ratio charts, specifically the 10 year chart.

As discussed in Part 1, silver has followed a blatantly obvious cycle of run-ups, corrections, and consolidations over the past 10 years.

Gold, on the other hand has, relatively speaking, just gone up.

The gold:silver ratio, on the first glance seems to be an indistinguishable, schizophrenic mess.

When you line the charts up though, an interesting pattern emerges.  Quite simply, every time silver hits a blow off top, the gold:silver ratio hits a new bottom.  Taking this into consideration, it should be pretty evident that an additional criteria (to those discussed in Part 1) for determining when to sell silver is when the gold:silver ratio hits a new bottom.

Given that the last bottom in the GSR was around 31.4 on 28 April 2011, it stands to reason that a very good opportunity to sell would be when the GSR is below that level.

In later posts, I'll discuss the prospects of how this phenomenon factor into a strategy to buy both gold and silver.