logo
  Join        Login             Stock Quote

Silver's Rise May be Bullish for Stocks

 October 03, 2012 02:20 PM


(By Michael Tarsala) The rising price of silver is giving a strong, healthy signal for U.S. stocks.

 

Source: Stockcharts.com

Silver prices are up strongly since mid-August. As you can see from this chart, silver in recent days saw the "golden cross" -- the 50-day moving average rising above its 200-day average. Technical analysts see the golden cross as an important indicator for gauging longer-term trends.

[Related -Gold: The Ultimate Store of Value?]

It's not so what silver is doing on its own that's providing a stock signal, though: It's how it continues to move relative to gold.

The silver/gold ratio has a long history of moving more or less in line with the S&P 500. As a result, movements of the silver/gold ratio chart can sometimes be telling about stock direction.

Silver tends to rise faster than gold when market participants are optimistic about the economy. The reason is that silver has many industrial and commercial uses. Gold only has a few; it tends to take on its own currency-like status and has a role as an inflation hedge.

[Related -Why Gold Is Undervalued]

As a result, a rising silver/gold ratio mirrors stock price optimism.

Source: Stockcharts.com

Just like silver,, the silver/gold ratio is close to seeing a "golden cross" of its own. It hasn't happened quite yet, but it could soon follow the price pattern for spot gold.

So watch for the silver-gold "golden cross" as another potentially encouraging sign that the stock market's up trend remains healthy.

Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageRussell 2000 Showing Relative Weakness at the New Highs

A quick “Quad Index” Grid shows us that the small-cap Russell 2000 is showing relative strength to the read on...

article imageThe Poster Boy For Liberal Economics Discovers The Tax Factor

Paul Krugman seems to be having a supply-side-economics moment… sort of. Raising taxes, the NY Times read on...

article imageMacroprudential Policy And Distribution Of Risk

There is very little doubt that housing prices and leverage played a strong role in the global financial read on...

article imageIs the World Turning Japanese?

Many really think so, but reality suggests read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Perfect Storm Driving Gold Higher
More Articles on: Finance , Commodity



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.