Fundamentals for Silver seem to be good
Despite a rally in gold price in the last months which saw it over USD 1300 per ounce the performance of silver was poor. It seems that the relationship between Gold and silver is kind of broken.
Despite a rally in gold price in the last months which saw it over USD 1300 per ounce the performance of silver was poor. It seems that the relationship between Gold and silver is kind of broken. The two precious metals used to be higher correlated than it is actually. As a consequence the gold to silver ratio is rising reaching as high as 79 in September. Some market participant might understand this as a BUY signal.
Since the beginning of the year Silver did not manage to break the USD 19 per ounce limit. Even if the fundamental seems to be good, as demand toward silver is growing.
On a shorter term view, Silver followed the evolution of the gold price, which has been under pressure in the last days. Precious metals which pay no dividend and cost money to store might be actually in a selloff period. This possible trend is boosted by a stronger USD.
Yellen’s speech regarding the actual monetary policy of the FED put silver under pressure. Yellen’s assumptions were that the FED might have misjudged the strength of the US-labor Market and it may overheat, which would led to higher inflation. The USD got stronger after the Yellen’s speech, which works against silver. A raise in interest rates by the FED is moreover very likely until end of 2017. This might elevate the pressure on the precious metals, however the future development remains to be seen.
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