Gold’s Silver Lining
Gold and silver have always had an almost symbiotic relationship, and while it would be untrue to say they move in lockstep, what happens to the silver price often indicates the future for that of gold. Gold is going through a long-term rally, but silver has gone through an eight-year bear market since its all-time peak of $50/oz, in 2011. One metric used to track the relationship between these two metals is the price of gold divided by the price of silver – the gold:silver ratio. The price of gold has risen faster than that of silver since the end of May, and we may have seen a peak in the gold:silver ratio late last month at 96:1. The last week of June 2019 marked only the third time in modern monetary history that this closely watched metric has risen above 90:1. Given the symbiosis between gold and silver, any significant rally in silver helps keep the gold price elevated, as the focus on the precious metals complex intensifies.
In the past week silver has moved higher, breaking the $16/oz resistance line for the first time since February this year which, given the relationship between silver and gold, should excite gold investors. With silver lagging during the recent gold rally, gold needs silver to keep buyers on board and maintain interest. Towards the end of last week, US manufacturing numbers forced the 30-year US government bonds to lose value, but gold remained stable and created a new high, with much of the credit being given to silver’s supportive rise.
With the gold/silver ratio this high (see chart), a significant rally in the silver market is overdue and that will help gold to remain elevated. Glint isn’t in the business of using silver as a currency – but we are happy to see such interesting support from gold’s little sister. Choose Glint, buy gold, and protect your wealth today.