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How Gold and Silver Performed amid Geopolitical Tensions

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Apr. 20 2018, Updated 3:20 p.m. ET

Silver outperforms

The past one month has been good for precious metals with the exception of platinum. Gold, silver, and palladium have increased a whopping 3%, 6.4%, and 4.4%, respectively, during the last 30 trading days. Platinum has dropped about 0.97% during the same timeframe. All the four precious metals rose on Wednesday most likely due to the prevailing geopolitical tensions.

Though gold dropped during the early trading session on Wednesday, it slowly recovered the losses and ended the day in the green. Spot gold scaled 0.15% and closed at $1,349 an ounce. Silver had a substantial run of almost 2.5% and closed at $17.2 per ounce. The revival of the equity markets may have provided some buoyancy to silver, as it’s closely associated with industrial demand.

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Ratio analysis

The above chart compares the performance of the two most crucial precious metals over the last one month. We see that silver has outpaced gold in terms of gains over the past few days. The comparative performance between the two is also evident in the gold-silver spread, which is a measure of the number of silver ounces it takes to buy a single ounce of gold. As of Wednesday, April 18, the ratio was trading at 78.2, indicating that it now takes about 78 ounces of silver to buy an ounce of gold. The ratio was at 81.4 at the start of April.

A decline in the ratio is indicative that silver (SLV) has gained more strength than gold (GLD), while a rise suggests the opposite. The RSI level for the ratio is at 31.3, indicating a possible rebound in the ratio.

Some of the mining companies that also rose on Wednesday alongside the rise in gold and silver are Barrick Gold (ABX), Coeur Mining (CDE), Yamana Gold (AUY), and Pan American Silver (PAAS). These were up 1.5%, 0.94%, 1.4%, and 2.4%, respectively.

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