uploads///Gold Silver Spread

The Gold-Silver Ratio Reaction to the Market Turmoil

By

Jan. 11 2016, Updated 9:01 a.m. ET

Gold-silver ratio

Gold is well known as a store of value in tough financial times. But its counterpart, silver, is less famous as a haven asset. Silver has an industrial status to it, and weaker Chinese markets along with a global stock rout have kept a lid on it. Silver did try to rally alongside gold and gained 0.6% during the past five trading days as of January 8, 2016. During the same time, gold rose 3.6%. The rise in gold more than silver has caused the gold-silver spread, or the gold-silver ratio, to surge.

The gold-silver ratio helps investors determine the number of silver ounces it takes to buy one ounce of gold. The ratio is trading at 79.2, which means that it takes 79 ounces of silver to equal a single ounce of gold. The graph below shows the one-month performance of the gold-to-silver ratio.

Article continues below advertisement

Gold and silver miners

The upward sloping line in the graph indicates that gold is getting comparatively stronger than silver. The rise in the price of gold has helped gold-mining companies such as Gold Fields (GFI) and Iamgold (IAG), which rose 11.9% and 18.3%, respectively, during the past five trading days as of January 8, 2016.

During the same time frame, silver-mining companies such as Coeur Mining (CDE) and First Majestic Silver (AG) rose 6.5% and 2.8%, respectively. There are several stock-specific factors that may also impact these companies’ share prices.

These four companies together contribute 6.1% to the price changes in the VanEck Vectors Gold Miners ETF (GDX). The Sprott Gold Miners ETF (SGDM) and the Global X Silver Miners ETF (SIL) rose 7.3% and 1%, respectively, on a five-day trailing basis as of January 8, 2016.

Advertisement

More From Market Realist

  • Open sign on a sidewalk
    Macroeconomic Analysis
    Top Reopening Stocks to Play the Shifting Market Sentiment
  • Morgan Stanley sign and stock numbers
    Macroeconomic Analysis
    Morgan Stanley's Buyback Stock Picks in 2021
  • Black Wall Street sign is sign of ethical investing
    Macroeconomic Analysis
    Ethical Investing Stocks and Funds for Your 2021 Portfolio
  • New York City skyline and Goldman Sachs logo
    Macroeconomic Analysis
    Goldman Sachs: Options Trade Picks to Play Earnings Season Volatility
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.