Correlation: Gold/Silver Ratio Vs. S&P

Zero Hedge thaught us another correlation. The Gold/Silver Ratio actually has a meaning.



When the ratio goes up, gold goes up more than silver, which means fear is growing. In that environment, the stock market declines. Conversely, when the gold/silver ratio declines, silver is stronger than gold, which means fear is going away and the risk-on trade is prevalent.



Another way to look at it is: when stock markets plunge, silver won't do well.






Chart 1: Gold/Silver Ratio Vs. S&P

So we have yet another tool to predict the stock markets. Just keep it in mind.



You can monitor the Gold/Silver ratio here:

http://stockcharts.com/freecharts/gallery.html?s=%24GOLD%3A%24SILVER

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