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10
Crypto Mania and the Gold Silver Ratio
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Consider that in the precious metals space, big money tends to gold and little money tends to silver. A little guy can spare $25 bucks out of his pay to buy a silver coin, but a big guy finds all of that silver to be too bulky. For this reason we can consider the gold silver ratio to be an indicator of interest in metals market from small retail investors.

Examine the chart of the gold silver ratio in this article. The current gold silver ratio is at a high, 80.5, which means it takes 80.5 ounces of silver to buy one ounce of gold. You can see there is a cycle.

During this cycle, a lot of the small money retail silver buyers have been directing their speculative dollars to the crypto market. For example, in the last year silver is down $2 bucks (-10%). Mean-while, gold is up $80 bucks ( 6%) over the same period. That is the result of retail buyers leaving the silver market and buying crypto.

I'm jpointing this out because there is an extreme in market sentiment right now that I believe is a trade-able opportunity. Silver has a reputation as gold's psychotic little brother for a reason, and that reason is the herd behavior of the retail silver buyer. Gold leads and then silver follows with a larger percent move as the retail guys chase.

There are two types of crypto traders, successful and unsuccessful. The unsuccessful guys will get frustrated, and seeing silver start to move, they will chase it. The successful guys will be sitting on a lot of cash and start looking for ways to diversify outside of crypto-land. Silver is a natural contrarian play for them here.

That's the trade you want to be in. The trade that nobody else is in. Just waiting for them.

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6 years ago