Gold and Silver Tussle for Ascendency

John Robertson

PortfolioDirect

The gold price has stretched its link with silver to the upper end of a relatively well-defined historical range. No law of nature prevents gold prices going higher without silver following at least as quickly. Even so, the two markets have so many traders tracking these arcane relationships that they seem to stand a good chance of remaining intact. It is hard to imagine silver prices rising firmly in the event gold prices were falling. Any resolution of the trading pattern will most likely depend on silver prices falling by less than a fall in gold prices or by silver displaying unusual leverage to a rise in the gold price. History suggests the link will require the gold price to rise. Movements in the prices of the two commodities over the past 45 years show that a 10% fall in the gold price over a month has been associated with an average 12% fall in the silver price.


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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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