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Silver Continues to Out Perform Gold

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Although both gold and silver traded higher on the day, it was silver that outperformed gold by over 4 to 1. Both precious metals were aided by a falling U.S. dollar which is down by .59%.

Considering that gold closed up .37% or $5.70, it’s gain was less than the dollar’s decline in terms of percentages. This can be interpreted as moderate selling, but with the falling dollar gold’s percentage gain was less than the dollar’s decline.

Silver however gained 2.35%, and 1.76% was directly attributable to buyers bidding the precious white metal higher. Currently silver futures are trading at $19.69 up $0.45 on the day.

As reported in Newsweek, “Although the Hong Kong Chief Executive Carrie Lam is finally about two months of pressure and civil unrest, she announced on Wednesday that she was fully withdrawing the proposed extradition bill that brought millions of anti-government protesters into the street.”

However, this was not enough to take concerns off of the trade war which continues to be the primary factor of concern by market participants. Which took U.S. equities lower and cause precious metals to continue to rise.

As reported by “After hitting record highs in euros and British pounds, gold could be ready for new record highs in U.S. dollar terms, according to Bloomberg Intelligence (BI).”

The volume of silver ounces transferred in July fell 9.4% to 263.9 million ounces daily, with the corresponding value down 4.9% to $4.15 billion, the LBMA reported. There were 1,193 transfers per day in July, 10.2% lower month-on-month. Clearers settled on average 221,239 ounces per transfer, which was 0.9% higher.”

One can clearly see that silver is outperforming gold by looking at the gold silver spot ratio. Currently it is at 79, which means each ounce of gold is the equivalent of 79 ounces of silver. As of July 15, 2019, the gold silver ratio was at 92. The differential between pricing two months ago and the gold silver ratio pricing as of today confirms that silver has outperformed gold for the last two months.

Clearly it is likely that both gold and silver will trade higher in the September, if the current trend continues, we can expect silver to have a greater percentage gain this month than gold. That would indicate that it is proper to be long both gold and silver with the expectations that gold will continue to underperform the percentage gain when compared to silver.

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Wishing you as always, good trading,

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