But what happens when traders catch onto the fact that gold and silver will rally as this "Crazy Ivan" event takes place and that silver is the true undervalued metal across the planet? At the peak of gold and silver prices near April 2011, the Gold:Silver ratio was resting near 32 (yes, you read that correctly). What would that look like on the silver chart, below, if gold continued to rally to levels above $2000? It is really simple to find out.
$2000 (gold per ounce) / 32 = $62.50 per ounce of silver
What if gold rallied a full 100% Fibonacci measured move from the previous 1999-2011 rally? That peak level would be $2700 in gold and the calculation is still simple.
$2700 (estimate gold peak) / 32 = $84.375 per ounce of silver.
Could it happen like that? Yes, in theory, and in reality it really could happen that way if gold rallies to a level that equals a full 100% Fibonacci price extension and the ratio level falls to levels near 32. If that did happen, then these calculations would be accurate.
At the moment the Gold/Silver ratio is 98!!!!
Silver is trading at about $17 at the moment.
