by Alasdair MacLeod
Gold and silver appeared to defy gravity this week, rising strongly. From last Friday’s close, gold rose $89 to trade at $1895 in European trade this morning, while silver rose $3.27 to $22.57, having peaked at $23.20. To put it into context, so far this year gold is up 24% and silver 27%.
Silver’s sharp rerating is the stand-out story. Our next chart shows the gold/silver ratio, which illustrates the unprecedented degree of relative movement between the two metals.
[…] It serves to remind us that the spike to 125 was a price distortion, a sell-off for silver and a major turning point. Even then, silver still looks good relative value at the current ratio of 84, given that last time gold was at the $1900 level, the gold/silver ratio was 32. If that relationship had held, silver would be $59.