Gold has been on a scorching run this year gaining over 25% year-to-date. While the SPDR Gold Trust ([GLD]) gave its first sell signal in two years this month, the technical picture remains overwhelmingly positive. However, the same can’t be said for the other major precious metal, silver.
Gold has been on a scorching run this year gaining over 25% year-to-date. While the SPDR Gold Trust (GLD) gave its first sell signal in two years this month, the technical picture remains overwhelmingly positive. However, the same can’t be said for the other major precious metal, silver. The iShares Silver Trust (SLV) has done well this year gaining almost 15%, but it still trades below its 2024 high. Over the last trailing year, GLD has outperformed SLV by 33%. While SLV’s technical picture isn’t overwhelmingly positive like GLD, it does have plenty of support in the mid-20s and is building energy in a year-long range. A breakout above SLV’s 2024 high would open the precious metal for a large move higher, something to keep an eye out for moving forward.
One way to track the relationship between gold and silver is the Mint Ratio, the amount of silver needed (in oz) to purchase a single ounce of gold. In most periods this relationship is inversely correlated to risk appetite, rising in market downturns as investors flock to the traditional safety of gold over silver which tends to have more economic uses. The line chart below is a five-year history of this relationship. Interestingly, the Mint Ratio crossed above its 50-day moving average back in March of this year, which in hindsight would have been a good risk-off signal. It can also be viewed as a mean reversion indicator as gold and silver usually move in conjunction with one another. In April, the Mint Ratio hit 100 for the first time since 2020 and what followed was a strong relative performance from silver. While this doesn’t mean silver has to move higher (gold could fall while silver falls less), if the technical picture for silver improves then it could be a good opportunity for silver to play “catch-up” with gold.
