I've posted a 10 year chart below which shows the price of Ag compared to the price of Au (shown in green) over the same period.
I mentioned in a previous post recently that each time silver has broken away from the long term trend it shares with gold it returns to trend relatively decisively and on occasion it has fallen below the trend.
This is evident as shown using the chart back in early 2006, early 2006, early 2008 (GFC) & again now early 2011.
On each occasion the price has "broken out" from the blue horizontal line it has retraced to the red horizontal line which is slightly above the blue (higher lows - uptrend).
The POS has also remained "in check" or lockstep with the POG throughout this period until the end of last year when that changed as can be seen on the chart.
So the question is will the POG rise significantly over in the imminent future or will the POS retrace to fall back in line with the longer term trend?
There is IMO an argument for both plays however I personally believe that the POS retracing the more likely of the two and I also believe should this be the case the short green line indicated at $27.50 is where the POS will return to in the short term.
Interesting time ahead for both metals ;)
WC8
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