Gold to Silver Ratio: Hemorrhage or Injection Phase within the Depressionary Box

Silver investors are often pessimistic and optimistic at the wrong times. Pessimism reigns in the late stages of the hemorrhage phase. Nobody wants to buy silver after a beating. Conversely, optimism reigns in the late stages of the liquidity injection phase. After a big run, investors come to believe that trees grow to the sky.

The liquidity injection phase started in 2009. The relative out performance of silver over gold since then is clearly indicated in the gold to silver ratio (GSR) chart below. What it closely, as not only will the gsr help you reallocate between gold and silver but also distinguish between liquidity and hemorrhage phases within the depressionary box.

Gold to Silver Ratio (GSR):