The moves of the silver price are exaggerated moves of the gold price
When you look at the price of silver
compared to the price of gold, there’s no disputing that it’s underperformed. You can see this in the chart below...
Silver tends to exaggerate the moves of gold, Sean Brodrick in Investment U explains. It outperforms on the way up and underperforms on the way down.
Yet over the past month, gold has started climbing. But silver hasn’t budged.
The reason for that is as well as being a precious metal, silver is also an industrial metal. Industrial use accounts for almost half of the use of silver.
As investors are fretting about the global economy, this isn’t good for the price of silver.
Yet the good news is that demand for silver is still there. Over the last week or so, China’s released some favourable data about its economic growth and industrial production.
The ins and outs of the gold-silver ratio
At the moment, the gold-silver ratio is sitting at over 70-to-1. This is much higher than its historical range of between 45-to-1 and 60-to-1.
Looking at this ratio, the good news is it’s getting near to a level where it usually rebounds from. You can see this on the chart below…
Once the ratio reaches 80-to-1, if history is anything to go by, there will be a pullback. This would lead to the gold-silver ratio coming back down.
What could make the ratio readjust? There are two probable outcomes…
Precious metals drop in price, but gold will fall faster and harder than silver; or
Precious metals will rise in price and silver will rise more.
It’s hard to say which option will happen, but option two is probably more likely.
Opportunities with silver
If you don’t mind taking on a bit of risk when you invest, you could look to silver miners. Many of them are trading at very cheap levels. But there’s always the possibility they could go lower.
Or you could opt for a silver exchange traded fund (ETF) like Global X Silver Miners on the New York Stock Exchange. There are no silver ETFs on the JSE.
So there you have it. Silver: The good, the bad and the opportunities its presents.
*********** Best seller *************
"I'm really sorry, but we have to let you go..."
Imagine how horrific it would be to receive that message from your boss. I think we can all agree that the employment situation these days is bad.
I want to show you how you can get wealthy on your own terms…And never worry about getting fired, retrenched or forced into retirement ever again.
I’m the managing editor of a private and powerful investment publication that taps into an exclusive network of expert investors. I’m talking about a serious network of brokers, lawyers, traders, bankers, publishers and businessmen…
Our aim is, quite simply, to protect and expand your personal wealth through the traditional methods of making money…
Today you can enjoy this same privilege – and put the worry of money behind you for good!