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Looking at the Spread between Gold and Silver

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Spread measures

When analyzing the comparative movement in the precious metal markets, it’s crucial that we take a look at the relative performance of these metals. The spread is an excellent gauge in assessing the growth of gold, silver, platinum, and palladium. In this article, we’ll look at the spread between gold and silver. 

The iShares Gold Trust ETF (IAU) and the iShares Silver Trust ETF (SLV) also track the movements of these two crucial metals. IAU and SLV have dropped 3.5% and 4.1%, respectively, YTD (year-to-date).

Gold weakened in June

The gold-silver spread stands at 77, which indicates that it takes about 77 ounces of silver to buy one ounce of gold. A higher ratio indicates more strength for gold over silver and vice versa. Over the last month, this ratio has declined from 78 to 77. The ratio has dropped considerably since the beginning of June. Gold was trading at $1,256.60 per ounce, and silver was trading at $16.40 per ounce.

The gold-silver spread’s RSI (relative strength index) score was ~38 on June 26. An RSI below 30 suggests a possible price increase, while an RSI above 70 suggests a downturn. 

The mining companies that have seen their prices rise over the last five trading days include Anglo Gold Ashanti (AU), Pan American Silver (PAAS), Kinross Gold (KGC), and Alacer Gold (ASR). These miners saw five-day gains of 0.99%, 0.51%, 0.27%, and 0.39%, respectively. These four mining companies together contribute ~9.9% to the VanEck Vectors Gold Miners ETF (GDX).

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