Tuesday, September 17, 2013
Our silver/Australian dollar comparative introduced in last week’s Connecting the Dots note illustrates such point.
As we described, silver (or gold) has led the Aussie on both sides of the track this year. Our current expectations (as shown in the chart below) is that the assets have now converged, but will begin trending higher just as silver reflexively bounced into May before resuming its downtrend with the Aussie into June.
On the comparative chart below you can see the largest contrast with silver’s move higher is the degree of momentum as expressed with its RSI. While silver exhibited a substantially more overbought condition that peaked ~ 80 in August, the Aussie is currently trending ~ 60 – as silver has now worked off its overbought condition and currently resides ~ 40.