Silver Shines as Gold:Silver Ratio at 3-Yr High Attracts Investors

SAN FRANCISCO (Aug 3)   Silver has been the weakest performing metal on a 12-month basis, but outperformed other precious metals last week, gaining 3.1%. In a role reversal, palladium, the best performer on a 12-month basis, was the biggest loser last week, declining 1.6%. While US benchmark equities were affected by end of the month position squaring and traditionally light summer holiday turnover, precious metals buyers remained active. The US Mint reported last week that it is on pace to sell 4.7mn ounces of silver coins in July, up over 100% from a year earlier.

The sale of US Mint silver coins is running at a record pace in 2013, potentially near 50mn ounces. In 2011, The US Mint’s previous record of 40mn ounces in 2011, roughly matched total US annual production in that year. According to The Silver Institute, US production in 2012 was just over 32mn ounces, well below the current level of US coin demand.

Historical Gold/Silver Ratio:   Silver remains the Precious Metal to watch as is hovers at US$20/oz., a key pivot point since the rally to $21oz. in the spring of 2008.     Silver often tracks the gold price due to store of value demands, although the ratio can vary. The gold/silver price ratio is often analyzed by traders, investors and buyers. In Roman times, the price ratio was set at 12 or 12.5 to 1. In 1792, the gold/silver price ratio was fixed by law in the United States at 15:1,  which meant that one troy ounce of gold was worth 15 troy ounces of silver; a ratio of 15.5:1 was enacted in France in 1803. The average gold/silver price ratio during the 20th century, however, was 47:1