uploads///Gold to Silver Ratio

Analyzing the Precious Metals Market with the Gold-Silver Ratio

By

Updated

Gold-silver ratio

Gold and silver have been strong for the past few days. However, silver has substantially outperformed gold year-to-date. The gold-silver ratio is an important element to consider when doing a comparative study of the two precious metals.

The gold-silver ratio was trading at 73 on November 21, 2016, the highest it’s been since late June. This ratio suggests that it takes almost 73 ounces of silver to buy a single ounce of gold. The ratio has fallen drastically since 2016 started. The most recent ratio marked gold’s highest premium over silver since July.

Gold’s premium over silver rose to a five-and-a-half-month high this week as precious metals sold off again amid the continued strength of the US dollar. Gold’s premium has risen 6.4% over the past two months.

Article continues below advertisement

Silver overtook gold

The gold-silver ratio fell to its lowest level in three decades in 2011. In a bull market for precious metals, silver usually outperforms gold. The opposite tends to be the case in a bear market.

The spread recently rose due to a sharp fall in silver. The relative performances of gold and silver can be seen via mining funds such as the Physical Swiss Gold Shares ETF (SGOL) and Physical Silver Shares ETF (SIVR). These two funds have seen tremendous year-to-date rises, but they’ve witnessed falls over the past month.

Mining stocks have also suffered over the past few months. These stocks include Randgold Resources (GOLD), Harmony Gold (HMY), Royal Gold (RGLD), and First Majestic Silver (AG).

Advertisement

More From Market Realist