The relationship between gold and silver has changed dramatically

While gold has soared this year, silver has skyrocketed, leading to a big move in a key measure of relative strength often used by traders. 

In the beginning of 2016, an ounce of gold was worth as much as 77 ounces of silver; by the end of February, that number would rise above 83. Yet on Monday, with gold trading at $1,357 per troy ounce and silver at $20.40, the gold/silver ratio is down to 66.5. 

While this the lowest this indicator has been since September 2014, the ratio is actually still above historical norms. The average reading of the gold/silver ratio over the past 20 years is 61; over the past five years, it's about 63. This may suggest that some of the premium gold has recently enjoyed as compared to silver has evaporated.

"We would view silver's out performance as a signal that investors are embracing risk again," Wald said Friday, adding that "it confirms our view that we think the S&P 500 is setting up for new highs over the next coming months." 

Indeed, silver's industrial uses mean that its performance is more closely tied to global growth, and consequently more highly correlated with stocks than gold is. This provides ammunition for Wald's view, which is predicated on trend-following, as well as for McDonald's, which is predicated on fading the crowd.

DYI Comments:  DYI has been stating for months that the trade to be is to sell down gold to purchase silver.  The gold/silver ratio was hitting in the high 80's to 1 setting up "shooting fish in a barrel" for the gold to silver trade.  Also I would not be surprised over the coming months that the U.S. market goes into a speculative blowoff highs for stocks.  Sub atomic low interest rates with all of the money central banks have ginned up it is no surprise if stocks set higher highs.  Of course valuations are now so absurd anyone playing the game of finding a greater fool to sell off the over priced merchandise may end up getting hurt.  DYI's expectation are maintain in anticipating from peak(wherever that will be) to trough a decline of 45% to 60%.

For those of you who wish to speculate you are on your own!

DYI