Silver Correction Warning: Gold-Based Analysis

In-Depth Analysis

Over the past few months, the dollar debasement narrative has been questioned. However, assuming this narrative is accurate and driving gold and silver prices, an analysis of gold returns can provide insights into silver's fair value.

A strong correlation exists between the 50-day percentage changes in gold and silver prices. The trend line formula "y=1.2223x" indicates that for every 1% change in gold prices, silver should change by 1.2223%. However, recent data shows silver's outperformance as a gross anomaly based on data since 1970.

The current measurement indicates that silver's outperformance is excessive. Even if the debasement argument holds, recent price gains in silver appear overdone, suggesting a potential correction.

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FAQ

What does this analysis suggest for silver investors?

The analysis suggests caution, as silver prices may be overextended and due for a correction.

Is this analysis a prediction of a silver crash?

No, it simply provides a perspective on the magnitude of silver's short-term outperformance relative to gold.

Takeaways

Silver's recent price surge may not be sustainable based on its historical relationship with gold.
Investors should consider the possibility of a silver price correction.
Monitor gold and silver price movements to assess potential shifts in the market.
The current fair value of silver is estimated at $59.25 according to the analysis.

Discussion

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Sources

Silver hits record high above $100/oz as gold closes in on $5,000 milestone Silver Tops $100 as Global Turmoil Fuels Run for Safe Havens Silver Math: Gold Warns Of Silver Correction

Disclaimer

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