Silver picks up the baton from gold

Ole Hansen

Head of Commodity Strategy

Summary:  During the past six weeks silver has outperformed gold by 10%. This as it continues to claw back some of the territory it lost in recent years.


Silver continues to claw back some of the territory it lost to gold during the past few years. Gold’s impressive rally that began with the emerging collapse in global bond yields back in early June initially left silver trailing. The ratio measuring the value of one ounce of gold in ounces of silver hit a multi-decade high above 93 last month before a very crowded long in gold began to see investors divert to silver instead.

During the past six weeks silver has outperformed gold by 10% with the ratio falling to the current 84. The latest run higher occurred after silver on Monday following a couple of attempts finally broke above $17.50/oz, the 50% retracement of the 2016 to 2018 sell-off.

From a technical perspective silver is currently finding some resistance at $18.36 as per the chart below. However, given the record speculative long position in gold and a silver long which can double before hitting its 2017 record the potential for further silver gains remain. At current levels the gold-silver ratio still trades some 8% above the five-year average.

Source: Saxo Bank
Speculative futures positions held by money managers.
XAUXAG ratio with the green line highlighting the five-year average. Source: Saxo Bank

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