Gold/Silver Relative Percentage Price Oscillator

Gold/Silver Relative Percentage Price Oscillator - by Saras Trader, Strategic Allocation & Trend Model (Not a buy/sell signal indicator)

Overview
This tool implements a relative value framework between Gold and Silver, designed to answer: Which metal is relatively undervalued, and how should allocation adjust?
Instead of predicting price direction, the model analyzes valuation imbalance using:

• -Gold–Silver Ratio
  
• -Long-Term Equilibrium (200 MA)
  
• -PPO Deviation Model
  
• -Trend Classification
  
• -Automatic Portfolio Allocation
  

Core Concept
Gold–Silver Ratio = Gold Price ÷ Silver Price
• Rising Ratio → Gold outperforming Silver
• Falling Ratio → Silver outperforming Gold
A 200-period moving average defines structural equilibrium.
Deviation from equilibrium is measured via a Percentage Price Oscillator (PPO).

Trend Logic
PPO Zone Trend Interpretation
≥ +30 Gold Extreme Gold historically expensive
+15 -- +30 Gold Favoured Defensive Gold tilt
–15 -- +15 Neutral Relative equilibrium
–35 -- –15 Silver Favoured Silver undervaluation
≤ –35 Silver Extreme Silver historically cheap

Trend reflects relative valuation, not price forecasts.

Auto Allocation Model (Out of 100)
Regime Gold % Silver %
Gold Extreme 85 15
Gold Favoured 75 25
Neutral 65 35
Silver Favoured 55 45
Silver Extreme 45 55

Assets assumption
Gold = Stabilizer
Silver = Accelerator
“Favoured” = Tilt vs Neutral (not dominance)

Userguide
Recommended Timeframes
• Weekly (preferred)
• Daily (acceptable)
Not designed for intraday trading

Portfolio / ETF Users (GLD / SLV)
Example:
If the table shows:
Silver Favoured → Gold 55% / Silver 45%
Portfolio Allocation:
• 55% → GLD / IAU
• 45% → SLV
Rebalance only when the trend changes.

Mean-Reversion Framework
• High PPO → Gold relatively stretched
• Deep Negative PPO → Silver relatively stretched

The model assumes long-horizon cyclical mean reversion.

For ETF-Specific (GLD / SLV ) Instrument Mapping

• Gold Exposure → GLD / IAU
  
• Silver Exposure → SLV
  

Practical Allocation Translation
If the table indicates: Gold 55% / Silver 45%

Portfolio Example ($100,000):
$55,000 --GLD
$45,000 --SLV

Worked Historical Trend Examples
2008 – Global Financial Crisis
Observed Behavior:
Gold outperformed Silver
Ratio surged sharply
Model Response: Gold Favored / Gold Extreme trend-- Defensive allocation bias
Interpretation: Silver behaved as a pro-cyclical industrial asset under stress.

2020 – Pandemic Shock & Liquidity Event
Observed Behavior:
Silver collapse -- Ratio spike
Followed by the Silver super-cycle rally
Model Response: -- Silver Extreme regime after PPO collapse -- Aggressive Silver overweight
Interpretation: Classic mean-reversion from valuation dislocation.

2023 – Inflation & Policy Uncertainty Phase
Observed Behavior:
Oscillating dominance
Ratio mean-reverting without extremes
Model Response: -- Neutral / Favored regime shifts -- Balanced allocations
Interpretation: Non-trending relative value environment.