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Reading the Rise in the Gold-Silver Spread

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Gold-silver spread

Gold and silver have been strong for the past few days. However, silver has substantially outperformed gold year-to-date. Silver has risen 20.0%, while gold has risen 14.0% since the beginning of 2016.

The gold-silver spread, or the gold-silver ratio, is important to consider when doing a comparative study of these two precious metals. The gold-silver spread was trading at 73.2 on November 21, 2016. That ratio suggests that it takes almost 73 ounces of silver to buy a single ounce of gold.

The spread has fallen drastically since the beginning of the year. The most recent spread marked gold’s highest premium over silver since July.

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Silver overtook gold

The gold-silver spread fell to its lowest level in three decades in 2011, when gold rose to a record high. 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 comparatively large fall in silver. Gold and silver have trailing 30-day falls of 4.2% and 4.5%, respectively.

The performances of gold and silver can also be seen through funds such as the iShares Silver Trust (SLV) and the SPDR Gold Shares (GLD). These two funds have seen year-to-date rises of 20.0% and 14.0%, respectively.

Mining shares have seen positive returns over the past five trading days. Among the top performers were Randgold Resources (GOLD), Alamos Gold (AGI), Barrick Gold (ABX), and Goldcorp (GG).

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