How Did the Gold-Silver Ratio Perform in 2016?



Gold-silver ratio or 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 11.2% 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 71.5 on November 29, 2016. That ratio suggests that it takes almost 71 ounces of silver to buy a single ounce of gold. The RSI level for the spread was 48.4. 

An RSI level above 70 indicates that a stock has been overbought and could fall. An RSI level below 30 indicates that a stock has been oversold and could rise.

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 7.0% and 6.9%, respectively.

The performances of gold and silver can also be seen through funds such as the iShares Silver Trust (SLV) and the iShares Gold Trust (IAU).

Mining shares have seen positive returns over the past five trading days. Among the top performers were Royal Gold (RGLD), B2Gold (BTG), Eldorado Gold (EGO), and Alacer Gold (ASR). These four companies make up 10.9% of the changes in the VanEck Vectors Gold Miners ETF (GDX).


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