Silver Still The Cheaper Metal

The dollar’s comeback pushes gold back into its range.

Despite hitting three-month highs in recent sessions, gold couldn’t hold above the key $1,220 level for long. Prices quickly dropped back below that level as the dollar surged higher, rebounding from three-month lows of its own. 

Gold

Gold’s decline puts it back inside its short-term trading band between $1,180 and $1,220. This has been a comfortable zone for prices during the last two months. Without any other catalysts, gold may continue to fluctuate in this range based on day-to-day gyrations in the dollar.

Meanwhile, silver also retreated from three-month highs today. The gray metal remains tied at the hip with its more prominent cousin.

Silver 

A look at the gold/silver ratio reveals that the relative value of gold and silver has largely been stable for the past seven months. Since October, the ratio has fluctuated between 70 and 75. Before that, the ratio had been steadily increasing from a low of about 32 in 2011.

Gold/Silver Ratio

From a historical perspective, silver is “cheap” compared to gold, but we’d wait for a break below 70 in the gold/silver ratio before calling an end to silver’s four years of underperformance.

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