While silver has been beating gold in the past weeks, so far only bullion appears to be benefitting from strong investor demand.
The situation may be about to change, says Commerzbank, as the gold-silver ratio — a measurement that determines how many ounces of gold it takes to buy an ounce of silver — is beginning to retreat, after hovering near a ten-year high.
“Because silver has noticeably outperformed gold of late, the gold-silver ratio has decreased from almost 84 at the end of last month to a good 78, its lowest level since early February,” Commerzbank says in a research note Friday.
That means that silver may be starting to be seen as a cheap proxy for gold, says the bank, adding that the precious metal is profiting from the US dollar’s weakness in the wake of the Fed’s meeting. Commerzbank believes silver is also being pulled up by an ongoing and considerable rise in base metal prices.
Comex May silver traded Friday as high as $16.17 an ounce in New York, its strongest level since October. The metal was down to $15.8 an ounce by 10:30 am ET, while gold was down $6 from its closing price Thursday to $1,251.60 an ounce.