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Bulls lining up for gold means now may be a good time for silver

14th December 2018

By: Bloomberg

  

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LONDON –  The recent bounce in gold has so far happened without a similar move in silver. That might be about to change, according to Saxo Bank A/S.

Ole Hansen, head of commodity strategy at Saxo Bank, tracks the ratio of gold to silver and said the recent moves point in favor of higher silver prices.

The ratio has been stretched out in recent months, showing that silver is the cheapest relative to gold in 25 years. Hansen said the trend is starting to reverse, with the ratio falling below a 50-day moving average this week.

That means that silver is outpacing gold after months of lagging behind. The white metal is up 2.3% this month to $14.53 an ounce, compared with a 1.1% advance in bullion. Still, Hansen cautioned that there are other signs of weakness.

“Silver needs three things to run higher: higher gold, weaker dollar and stronger industrial metals,” said Ole Hansen, head of commodity strategy at Saxo Bank. “So far only the gold box can be ticked.”

Edited by Creamer Media Reporter

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