Silver has had a generous rebound since last year, climbing around 17% in the last three months, from around $13 in December to around $16 recently. Last week’s silver prices fell comparatively, and Monday opened this week softer on a stronger dollar.
Silver’s trajectory this week largely followed gold’s, which showed upticks after Janet Yellen’s dovish statements to prolong raising interest rates mid-week, and then a downturn after positive U.S. economic data was released later in the week.
The gold-silver ratio has gone up this week, meaning that gold has made greater gains than silver, increasing the distance between their relative price points. The ratio closed at 79.83 on Thursday. Historically speaking, silver performs well when the ratio is below 80. 1
Silver plunged Friday, along with gold prices, after U.S. economic data showed positive recovery in job growth and employment.
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Get Your Free ReportSilver has been trading sideways, and the gray metal is not making the same leaps and bounds as its yellow counterpart in the first quarter of 2016. Silver generally trades more enigmatically than gold, influenced primarily by gold, but also by industrial supply and demand.
Trader sentiment also creates a “coiled spring” approach to silver, which shows that as traders flock to gold, they end up flocking to silver as well. Because silver’s prices are so low, such a large influx when it happens causes a huge surge in pricing. So far, 2016 hasn’t created conditions rife for silver for skyrocket. Gold would need to rally long enough and high enough to cause major price gains in the gray metal. 2
Additional Sources:
1 – http://www.smarteranalyst.com/2016/03/28/the-gold-silver-ratio-went-up/
2 – http://www.smarteranalyst.com/2016/04/01/heres-what-will-send-oil-prices-back-up/