Yahoo Finance The Gold-Silver Ratio Trends Lower: How Does This Affect ETFs?
Not All That Glitters Is Gold: All Precious Metals See Gains
Silver at $17.40
The gold and silver markets have grown relatively volatile since the beginning of 2016, with volatility for gold and silver standing at 16% and 29.8%, respectively. Gold has been trading in the range of $1,228 to $1,254 per ounce over the past week, while silver has seen exponential gains and is trading between $16.90 and $17.40 per ounce. The markets are flooded with news that silver has overtaken gold.
RSI indicator
The RSI (relative strength indicator) readings for silver and gold are 71 and 52, respectively. A level above 70 indicates that the asset may be overbought and may see a downward revision. Similarly, a level below 30 indicates an oversold scenario and a possible upward revision.
Gold-silver ratio
The gold-silver ratio was at 72.3 on April 26, 2016. This means that it takes about 72 ounces of silver to buy a single ounce of gold. The ratio was at 81.4 at the start of April. The RSI level for the gold-silver ratio is at 31, the lower end of the range. The ratio can be expected to reverse from this point.
The rise and fall in gold and silver affects funds such as the SPDR Gold Shares ETF (GLD) and the iShares Silver Trust ETF (SLV). These two funds rose by 17.3% and 242%, respectively, on a year-to-date basis. Mining shares that have risen in 2016 include Sibanye Gold (SBGL), Eldorado Gold (EGO), and Hecla Mining (HL).
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