Gold/Silver ratio drops to lowest since November 2017

New York (Aug 6)  The gold/silver ratio, which measures the amount of silver it takes to buy the yellow metal, declined to a 33-month low of 75.27 early Thursday.

The ratio topped out at 126.56 in March and has declined by 40% ever since. This is because silver has rallied by 131% from $11.64 to $27 during the same time period, outperforming gold’s gain of 40.6%.

Silver being a semi-precious/semi-industrial metal looks to be drawing bid on haven appeal and optimism stemming from signs of revival in China, the world’s second-largest economy.

Both metals could continue to rally as central banks and governments are likely to continue pumping unprecedented amounts of liquidity into the global economy to counter the coronavirus-induced slowdown.

Silver, however, looks undervalued compared to gold and could continue to outshine gold, pushing the gold/silver ratio lower. Silver is still down 45% from the record high of $49.83 reached in April 2011.

FXstreet

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