How Does the Gold-Silver Spread Look?

The two crucial precious metals, gold and silver, have been weak for the past few days. However, silver has substantially outperformed gold year-to-date. Silver rose by 37.3%, while gold has risen 26.4% since the beginning of 2016.

The gold-silver spread, or the gold-silver ratio, is an important element to consider when doing a comparative study of these two precious metals. The gold-silver spread was trading at 70.8 as of August 22. The ratio suggests that it takes almost 70 ounces of silver to buy a single ounce of gold. The spread has fallen drastically since the new year started. That was gold’s highest premium over silver since July.

Since the beginning of August, the gold-silver spread has risen 6.8%. Silver’s performance has been remarkable in the second quarter. The ratio fell to the lowest level in three decades in 2011 when gold climbed to a record-high level. In a bull market for precious metals, silver usually outperforms gold. The opposite tends to be the case in a bear market.

The relative performances of gold and silver can also be seen through funds such as the iShares Silver Trust (SLV) and the iShares Gold Trust (IAU). These two funds have seen a year-to-date gain of 36.2% and 26.2%, respectively.

The mining shares that fell on Monday due to the loss in precious metals include Harmony Gold (HMY), Iamgold (IAG), and Eldorado Gold (EGO). These three equities have fallen 1.2%, 2.6%, and 1.9%, respectively.