Silver - Is it time to sell

I just wanted to add some more color on my last post about silver. I have made this chart where by I have compared gold to silver ratio.

In the above chart the green line represents how many ounce of silver we can buy for one ounce of gold. From the chart we can observe that when silver is costly relative to gold we can buy 20 ounce of silver for one ounce of gold and when Gold becomes extremely costly relative to silver we can buy 100 ounce of silver for one ounce of gold. The violet line is a 52 days simple moving average.

We can observe that mostly we can buy 40 to  80 ounce of silver for one ounce of gold. The current ratio stands at 33 which is very near to all time lows of 20 made in 1975. (the data is available since only 1975)

From the above chart we can conclude that currently silver is trading costly relative to gold as you can only buy 33 ounce of silver for once ounce of gold compared to a long term average of 50 -60.

But this do not mean that Gold to silver ratio can not go to 20. In that case you can find silver trading at 75 dollar per ounce. which is still 55% higher form the current levels.

My second chart is a long term price chart of silver.

The current chart is a quarterly candlestick chart of silver. We can see that silver made a high of 50 dollar to ounce in  1975 -1979. From there it corrected 96% to 2 dollar an ounce.

We can also see that on quarterly basis silver have never closed above 40 dollar an ounce. As per my knowledge and experience of technical analysis goes I feel that silver will not close above 40 cents on quarterly basis. therefore I expect the price of silver to close below 40 dollar an ounce by the end of  30th June 2011.

Moreover after a 100% + rise since I gave the call in last July I think that silver should have a good correction from this level. Moreover as per technical patterns also silver should take a breather correct significantly.

I would also like to add my caveat that this is just one possible scenario. There are N number of possibilities which can happen, but as per my knowledge and experience this is the most probable thing to happen.