bobbyw24
Banned
- Joined
- Sep 10, 2007
- Messages
- 14,097
http://www.commodityonline.com/news/Gold-to-silver-ratio-jumps-as-silver-prices-slump-19824-3-1.html
Gold-to-silver ratio jumps as silver prices slump
LONDON (Commodity Online): Silver's volatility has been in evidence yet again since our last report was published, the price having crashed by almost 22% from its 3rd June high of $15.97/oz to $12.47/oz on 13th July, although it has since recovered slightly, while gold has slumped by 7% over the same period.
This corresponds to the increase in the gold/silver ratio, which had dropped to a low of 61.16 on 3rd June to a high of 72.85 on 13th July. Silver's fall from grace in the past few weeks has been accompanied by the liquidation of net longs on Comex, over and above the slip in net longs for gold, suggesting that investors are concerned that industrial demand for silver may not recover in as timely a fashion as anticipated just one month earlier.
Indeed, silver mirrors the price trend seen in the base metals, much more so than that of gold; even copper has outperformed silver over this time period, while platinum and palladium are also ahead. It is certainly not any slackening of interest in ETF investment that has pressured the price, but nor have they offered much support holdings have remained flat since mid-June, suggesting a strong degree of trend uncertainty among investors.
The main driver right now therefore is Comex investment, which has shed almost 45 Moz since early June, while the decline in open interest since 20th June indicates heavy liquidation.
Silv er Outlook
The slump in the silver price and jump in the gold-to-silver ratio may be a buying opportunity for investors, especially since silver has plunged below 30 on the relative strength index; anything below 30 suggests that a price fall has gone too far.
Silver's widening industrial demand base still remains in place as a long-term support but in the short-term uncertainty about the overall direction of the recession will clog up the works and weigh on sentiment, as investors try and gauge direction. India's move to double import duty on silver (and gold) will also encourage greater levels of local recycling, to the detriment of import demand. Short-term London fix: $12/oz-$14.50/oz.
Courtesy: www.virtualmetals.co.uk
Gold-to-silver ratio jumps as silver prices slump
LONDON (Commodity Online): Silver's volatility has been in evidence yet again since our last report was published, the price having crashed by almost 22% from its 3rd June high of $15.97/oz to $12.47/oz on 13th July, although it has since recovered slightly, while gold has slumped by 7% over the same period.
This corresponds to the increase in the gold/silver ratio, which had dropped to a low of 61.16 on 3rd June to a high of 72.85 on 13th July. Silver's fall from grace in the past few weeks has been accompanied by the liquidation of net longs on Comex, over and above the slip in net longs for gold, suggesting that investors are concerned that industrial demand for silver may not recover in as timely a fashion as anticipated just one month earlier.
Indeed, silver mirrors the price trend seen in the base metals, much more so than that of gold; even copper has outperformed silver over this time period, while platinum and palladium are also ahead. It is certainly not any slackening of interest in ETF investment that has pressured the price, but nor have they offered much support holdings have remained flat since mid-June, suggesting a strong degree of trend uncertainty among investors.
The main driver right now therefore is Comex investment, which has shed almost 45 Moz since early June, while the decline in open interest since 20th June indicates heavy liquidation.
Silv er Outlook
The slump in the silver price and jump in the gold-to-silver ratio may be a buying opportunity for investors, especially since silver has plunged below 30 on the relative strength index; anything below 30 suggests that a price fall has gone too far.
Silver's widening industrial demand base still remains in place as a long-term support but in the short-term uncertainty about the overall direction of the recession will clog up the works and weigh on sentiment, as investors try and gauge direction. India's move to double import duty on silver (and gold) will also encourage greater levels of local recycling, to the detriment of import demand. Short-term London fix: $12/oz-$14.50/oz.
Courtesy: www.virtualmetals.co.uk
