Ole Hansen
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Editor’s Picks 12 July 2016 at 5:54 GMT

Gold versus silver: how the relationship has changed

While gold has soared this year, silver has skyrocketed, leading to a big move in a key measure of relative strength often used by traders. In the beginning of 2016, an ounce of gold was worth as much as 77 ounces of silver; by the end of February, that number would rise above 83. Yet on Monday, with gold trading at $1,357 per troy ounce and silver at $20.40, the gold/silver ratio is down to 66.5. While this the lowest this indicator has been since September 2014, the ratio is actually still above historical norms. The average reading of the gold/silver ratio over the past 20 years is 61; over the past five years, it's about 63. This may suggest that some of the premium gold has recently enjoyed as compared to silver has evaporated. Interestingly, the gold/silver ratio is one of those Wall Street tests that is used to determine the direction of equities, but whose signal can be misinterpreted. The gold/silver ratio also dropped in 2011 before the market's late-summer dive.
Read full article at CNBC
13 July
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