The latest charts from Sean Brodrick...

Regards - VHF

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Gold is Strong...Oil is Stronger... Silver is Strongest!

Sean Brodrick

April 4, 2011

Here are three charts you may find interesting.

You know that gold is doing very well, right? This morning it was at $1,436.80a troy ounce, near the intraday record it set last month of $1,447.70. That’s good. However, crude oil – which saw the U.S. benchmark price climb over $108 this morning – is doing even better, performance-wise.

Now here’s something else interesting. The news in silver is especially bullish. It just hit a new 31-year high this morning. And this extends silver’s outperformance compared to gold. In fact, the gold-silver ratio is at least at at 20-year low, and I could show you lower than that, but the charts from Stockcharts.com don’t go further than that. Take a look …

Some analysts believe the gold/silver ratio will go back to 16 – the ratio of silver to gold in the earth’s crust is 16-to-1 – others think further. I think 16 is likely longer-term, though we may see gold play catch-up in the shorter term as the world realize that Europe hasn't fixed its financial woes, which grow worse with every passing day.

So how about the relationship between silver and oil? Here’s a chart of that …

Clearly, silver has been winning the race with oil, too. The trend is your friend – until it ends – so this tells us where we want to put money for short-term outperformance.