On April 19, 2016, all four precious metals rose significantly. Where gold rose approximately 1.6%, silver, platinum, and palladium surpassed gold’s gains as the Chinese economy’s stabilization gave an optimistic sentiment to future industrial demand.
These three precious metals also have extensive industrial usage and may lean toward the industrial side rather than the precious metals side.
The performance of silver has been remarkable compared to gold over the past trading month. As silver rose 7.2% on a trailing-30-day basis, gold fell 0.47%.
The gold-silver ratio reflects the price comparison of these metals. The ratio measures the number of silver ounces it requires to buy a single ounce of gold. The ratio was trading at 73.8 as of April 19. The ratio fell approximately 2.8% on the day due to the comparative strength of silver.
RSI at 20.8
A noticeable part of the technical study of the gold-silver ratio is its RSI (relative strength index). The RSI for the gold-silver ratio as of April 19 was 20.8. A level of above 70 suggests overvaluation in a security, whereas a level of below 30 suggests undervaluation.
The RSI’s reading close to 20 indicates that a rebound in the ratio may be just around the corner. As the ratio would rise, gold would once again rise compared to silver.
The RSI levels for gold and silver are 56 and 73, respectively. Confirming the upward trend in silver, the RSI for silver also suggests that silver is currently overvalued.
The fluctuations in gold and silver can also be tracked by way of funds such as the SPDR Gold Shares ETF (GLD) and the iShares Silver Trust ETF (SLV). A few mining-based funds that are also primarily affected include the VanEck Vectors Gold Miners ETF (GDX), the iShares MSCI Global Gold Min Shares ETF (RING), and the SPDR S&P Metals and Mining ETF (XME).