Gold and Silver Prices Could Explode as Miner-to-Gold Ratio Breaks Out

Financial expert Michael Oliver believes that gold and silver prices are on the verge of exploding. He points to a 13-year signal in the miner-to-gold ratio, which he says could be a sign of stronger conditions across the precious metals market.

The ratio has been trapped at historically depressed levels for over a decade, but it's now breaking out above previous highs from that range. This development is significant because miners have historically become much stronger relative to gold during powerful precious metals advances.

Oliver examined the relationship between the price of GDX (the major gold mining ETF) and an ounce of gold. He found that the ratio stood near 6% to 6.5% around the early years of GDX, but it later collapsed as miners performed much worse than gold.

The Philadelphia Gold and Silver Index (XAU) historically traded between roughly 18% and 35% of the price of gold, with a middle range of 25% to 27%. However, after 2008, XAU dropped toward roughly 4% of gold's price, and it stayed in this depressed range for about 13 years.

Now, however, the ratio has moved above previous highs from that range. Oliver believes that this breakout could be a sign of stronger conditions across the precious metals market, and he expects miners to become much stronger relative to gold during powerful precious metals advances.