As they say, "the plot thickens,"  In the past month, silver prices have rocketed in relation to the upmove in gold prices, which has had the effect of narrowing the ration to 47:1 from 52:1.  Let's notice that the direction of the ratio to the downside has broken below a 26-year support line at 57:1, which has acted just like a major trend-break should, by accelerating to the downside towards my next optimal target zone in the vicinity of the March 1998 low at 46:1.  My work argues for a break below 46:1 on the way to 35:1 thereafter.  What does it mean?  That we should expect silver to outperform gold when they both advance, and even when they both correct, silver corrections will be shallower.

Mike Paulenoff is a 25-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his E-mini S&P and QQQQ technical analysis and trading alerts. For more of Mike Paulenoff, sign up for a FREE 30-Day Trial to his E-Mini/Index Futures diary, or try his QQQ Trading Diary.