The price is continuing to trade in a narrow range, but more intriguing is the action in its “little sister” in the world of bullion, .
Traditionally, gold trades at about 60 times the price of an ounce as silver, and was up at more than 80 times nearly three years ago.
But by mid-2016 silver had rallied relative to gold, and the ratio was down to about 66 times, well within sight of its long-run average.
Three-month picture brighter
However, this morning the ratio was right up again, to nearly 85 times.
This probably has rather less to do with a sudden upsurge in support for gold and rather more to do with silver’s role as a proxy for expected economic growth, given its industrial applications. More on that in a moment.
Gold this morning was trading at $1,202.10 an ounce, against $1,229.95 a month ago, on 15 October. Its high point for the month was $1,239.95 on 23 October and the most recent price is the low for the month.
But the picture is more discouraging when looking at trends for the last 12 months. On 15 November, gold stood at $1,282.20, reaching a high early in the period, on 25 January, of $1,354.95.
The low point was seen on 17 August, of $1,178.40.
Gold seems to have found support during the past year at about $1,150 and meets its resistance at about $1,350.
Silver, meanwhile, started the year at $17.1150 on 15 November 2017 and is currently $14.1800, trading between a yearly high point of $17.52 and a low point of $13.97.
The “dangerous” asset
So, the divergence between gold’s annual high and low price is about 15% of the current price, while the divergence between silver’s annual high and low is a much heftier 25% of the current price.
While gold trading is not always for the faint-hearted, silver has long had a reputation as a potentially-dangerous asset, for a number of reasons.
Two, Americans were banned from owning investment gold from 1934 until 1974, so silver became a substitute for bullion speculators. The most notorious of these were the brothers Nelson, William and Lamar Hunt, who tried to corner the silver market in 1979 and 1980, but the price collapsed and they were bankrupted.
Three, silver is primarily an industrial commodity, with more than half of world production accounted for by a range of uses – from alloys and photography, to medicine and the nuclear industry. This gives it more in common, in some ways, with metals such as copper than with gold, for which only about 9% of demand comes from industry.
Its weakening performance recently is almost certainly linked to fears of a marked global economic slowdown.