Gold-silver ratio breakout looks to last longer than the “Buffet hammer” of 1998
Guest Post from World Complex,
Today we present a simpler version of a chart we have seen before–a reconstructed state space diagram of the gold-silver ratio over the past twelve or so years. The differences are that instead of reconstructing the phase space from the gold-silver ratio, I have used a three point moving average of the gold-silver ratio to reduce some of the noise.
Three features of interest are the “Buffet hammer” of 1998 (so-called because its trajectory looks like a hammer), which resulted in a brief, sharp rise in the price of silver; the silver crash of 2009, and our current apparent breakout. The current breakout is about one month short of the duration of the Buffet hammer. If the gold-silver ratio remains at about its current value, the trajectory will curve towards the lower left corner of the graph–however this movement will take at least a year, before the lagged values (vertical axis) fall to where they are at present.
The fierce correction in the price of silver since early May is reflected in the little loop on the tail of the current breakout.