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What Investors Need to Know about Silver versus Gold

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Precious metals rose

Silver and other precious metals like platinum and palladium have been widely depending on the price changes in gold. So far, gold has risen in 2016. It gained a whopping 16.5% on a year-to-date basis. Silver often closely follows gold’s route. It has risen almost 16.9% due to safe-haven demands in 2016.

Silver outperformed gold during the past 30 trading days. Silver increased about 2.3%. Gold lost ~1.6%. As you can see in the following chart, these two metals usually walk hand-in-hand. Lately, they haven been moving in different directions.

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Technicals favor silver

Gold’s price as of April 15 is $1,234.6. It’s at an approximate discount of 0.2% from its short-term 20-day moving average of $1,236.5. Silver’s price is $16.3. It’s at a premium of 4.8% from its 20-day moving average price of $15.4. A discount indicates a downward trend for gold. A considerable premium over silver indicates an upward trend.

Gold-silver ratio

Ever since 2012, silver lagged compared to gold on the yearly performance. The comparative performance of these two metals can be tracked by the gold-silver spread as well. The spread was trading at 76.3. This means that it takes almost 79 ounces of silver to buy one ounce of gold. The ratio fell 2.2% during the past 30 days. This indicates strength for silver.

The gains in silver seem to be two-fold. The distant hike is helping precious metals. Also, the recovery in China could have boosted the industrial appeal of the metal. Funds that experienced gains due to silver’s rise include the iShares Silver Trust (SLV), the Global X Silver Miners ETF (SIL), and the ProShares Ultra Silver (AGQ).

Other funds that also rose considerably in 2016 include the Global X Uranium ETF (URA) and the VanEck Vectors Junior Gold Miners ETF (GDXJ).

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