On that basis investors, especially through exchange-traded funds, have continued to increase exposure to gold. Despite having seen the rally pause above $1700/oz the demand for gold through ETF’s have continued with total holdings reaching a record 2922 tons, up some 345 tons so far in 2020.
Silver meanwhile has following the March collapse recovered strongly towards key resistance at $16/oz. The improved sentiment has been supported by gold’s renewed rally and the recovery among industrial metals. While the global economy is heading into a recession – see note below - with lower demand and rising inventories several metals, such as copper, have found support from coronavirus related supply disruptions.
The March collapse triggered a surge in demand for silver-backed ETF’s with total holdings haven risen by 10% during the past month to reach a fresh record at 20,730 tons. The Gold-Silver ratio has come down to 111 (ounces of silver to one ounce of gold), lower than the +125 record reached last month, but well above the five-year average below 80. In order for silver to continue to narrow its gap to gold the yellow metal needs to rally further, not least due our belief that industrial metals may struggle to recover further, at least in the short term.