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Silver and Gold: Look Who May Be Gaining Now

A New Trajectory for Gold, Silver, and Precious Metal Miners?

Silver outperforming gold?

The rise in the haven bids so far in 2016 has caused a price jump for gold of nearly 16%. But silver has increased by only 10%. Usually, price changes in other precious metals stem from changes in gold, but over the past one month, silver has outperformed gold, with silver capping 2% and gold losing 0.53%.

We should note here that when conducting a comparative analysis of gold and silver, it’s important to consider the gold-silver ratio, or what we refer to as the gold-silver spread. The spread was trading at 80.7 as of Wednesday, March 30, 2016. This ratio has been decreasing, however, as gold has gained only comparatively higher bids than silver during the past month, increasing by 0.24%. Silver has lost 0.34% on a five-day trailing basis.

The fluctuations in these precious metals hs also helped the gains in funds like the iShares Silver Trust ETF (SLV) and the iShares Gold Trust (IAU), which have seen losses of 4.2% and 1.8%, respectively, on a five-day trailing basis.

Technical indicators

The technical indicators of gold have remained stable. Gold futures are currently trading at a premium of 7.7% from the 100-day moving average price of $1,141 per ounce. The RSI (relative strength indicator) for gold has also reasonably dropped from 70 in February to 48 on March 30, 2016. (A level above 70 indicates a possible pullback in price, whereas below 30 indicates possible price recovery.)

These relative changes in gold and silver represent the primary influences on RSI, which is, essentially, a measure of the number of ounces of silver it takes to buy a single ounce of gold. We should always remember, too, that changes in gold and silver have significant impacts on mining stocks like Yamana Gold (AUY), Pan American Silver (PAAS), and Newmont Mining (NEM).

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