MONEY
The price of gold has rallied to all-time highs, and investors in the yellow stuff have made some serious gains. Now, everyone is wondering where investors will move these gains into next.
The most obvious catch-up trade is silver. That is because silver has historically followed gold, and silver’s chart suggests its price is about to go parabolic. That is why today we will be doing a deep dive into silver and telling you where its price could be headed next.
Silver’s Relationship to Gold
Before we dive in, you need to know that nothing in this article is financial or investment advice. This is purely educational content intended to help you understand the silver market.
Now, at the time of shooting this artcile, gold is trading above the key psychological resistance level of $3,000. This is great news for gold investors, but it is even better news for silver investors. That is because a gold rally has historically been followed by an even bigger rally in silver. Although silver has also been rallying recently, it still seems to be undervalued relative to gold. In other words, it looks like silver still has a lot more room to rally compared with gold. This is something that can be clearly seen with something called the gold to silver ratio.
The gold to silver ratio analyzes how many ounces of silver you can buy for 1 ounce of gold. Investors keep an eye on this to determine whether gold is under or overvalued relative to silver and whether it may be a good idea to rotate out of gold and into silver when the ratio is elevated. This indicates that gold is expensive relative to silver, making silver more attractive as an investment.
The golden rule, yes pun intended, that many investors use is the 80/50 rule. If the…
