Don't Expect Silver To Continue To Outperform Gold - Capital Economics
The gold/silver ratio has dropped more than 4% since its recent highs two months ago and is currently trading at 77.72 points, as silver prices are pushing to a three-week high and are testing resistance below $17 an ounce, while gold is struggling around $1,300 an ounce.
“Silver’s outperformance could be just the white metal playing catch up with gold after underperforming for most of 2017,” said Simona Gambarini, commodities economist at Capital Economic, in a report Thursday. “What’s more, silver tends to outperform gold when industrial metals prices are also rising.”
However, Gambarini said that she sees three reasons why silver’s outperformance won’t last: industrial demand is expected to fall as China’s economy weakens, overall weak silver demand and short-term speculative interest.
“Overall, we are happy to reiterate our view that the silver price will end the year at around $16.00 per ounce, down from $16.85 currently,” she said. “Given that we expect the price of gold to end 2018 at around current levels of $1,300, the gold/silver price ratio should bounce back to 82, up from about 78 today.”