By Roy Martens Nov 12 2007 2:18PM
	www.resourcefortunes.com

All charts current as of the close on Friday, November 2nd, courtesy of Stockcharts.com

GOLD - silver Ratio

The Gold – Silver ratio chart is showing a rather interesting picture.

After a gradual decline of the ratio from the early 1990’s to the late 1990’s, perhaps having a lot to do with Warren Buffet’s purchase in 1997, we can see that Gold gained the upper hand until about mid-2003 when Silver took over once again.

This action resulted in the formation of a huge Head –Shoulder pattern with the neckline around the 46 level. A breach of the neckline to the downside triggers a price target of 12, the distance of the neckline to the head (46-80). A ratio of 12 is just below the long term average ratio of 15!

Although we have to consider that this is a monthly chart, meaning the predicted decline will take a fair amount of time, the potential for Silver in the coming years is made very clear.

GOLD

As we expected last month, the brief consolidation around the $740 level was enough to cool things down a bit and get Gold back into shape for another boost higher.

Because we are now in “uncharted” territory, it is difficult to pinpoint resistance and price targets for this current move, unless of course we look at the way back to the highs made in the early eighties. To get a bit of a grip on things, a magenta channel is plotted into the chart to see where this move could take us. It appears likely that we could touch the upper line of this channel around the $820 level, but that when we do, the chart will most likely be overheated. This could then lead to a possible decline or correction, taking us as far back as $740 and/or the 50 d. MA.

SILVER

Silver is still lagging the advance of Gold, and it hasn’t yet even reached the highs it made back in February/March of last year, though it is very close.

Silver made it past the first resistance zone and the expectations are justified that we will take on the last hurdle very soon. If Silver manages to break above the prior high, chances are excellent that Silver will get an extra boost and will charge ahead at a fierce pace.

This expectation fits perfectly with the chart of the Gold-Silver ratio presented earlier, but perhaps this is just the wishful thinking of a Silver bull.