Silver vs US Stock Indexes Says “Silver is Cheap!”

This week, we’ll take a look at a couple of ratio charts of silver vs some main US inventory indexes to see simply how cheap silver stays in opposition to equities. The primary chart of Silver/NASDAQ reveals worth as having traded inside a channel going again to the Eighties. There are a pair fascinating parts to the chart: first, the resistance line of the 80s and 90s that ultimately gave option to silver’s secular bull of the 2000’s seems to have cloned itself starting in 2011. Second, the ratio has solely this yr climbed above its decrease rail and stays traditionally exceptionally low. The final time the ratio rocketed off the decrease rail, silver costs climbed 10X over the following decade!

The second chart is of Silver/Russell 2000 (US small caps). Like with NASDAQ, we see worth buying and selling inside an image excellent channel with present worth close to the decrease rail. I’ve drawn a few cloned resistance strains right here too, although they will not be fairly as compelling as these within the Silver/NASDAQ chart. What does appear obvious, nonetheless, is that the identical rounded backside that fashioned over the Nineteen Nineties and 2000s seems to be replicating itself once more over the previous 10 years.

The third chart is of Silver/DJI (Dow Jones Index). No shock, worth once more has traded inside a neat channel – this one going  method again to 1900. The main focus of this chart is simply how far silver has fallen relative to equities. From 1980 to 2001, silver fell greater than 99% relative to the dow! Even immediately, worth stays down greater than 98% from the all time excessive. To get again to 2011 ranges, silver must rise 5X in opposition to the dow. To get again to that 1980 excessive, silver must rise about 70X in opposition to the dow. Whereas we could not ever see that 1980 ratio once more, one factor is obvious: silver is certainly fairly cheap relative to US shares.