Silver prices and related exchange traded funds are outshining gold Tuesday, jumping on safe-haven hedges, cheap valuations and short covering.
On Tuesday, the iShares Silver Trust (NYSEArca: SLV) was up 4.3% and ETFS Physical Silver Shares (NYSEArca: SIVR) was 4.4% higher. Meanwhile, the SPDR Gold Shares (NYSEArca: GLD) rose 2.2%. The precious metal ETFs are now trading above their 50-day simple moving average. Year-to-date, SLV and SIVR declined 16.0% while GLD dipped 0.3%.
Precious metals surged on safe-haven demand as investors sought a hedge to the sharp sell-off in equities in response to Chinese policymakers’ efforts to rein in risks in its financial system and revived fears over another Greek crisis.
“The sell-off this morning was fundamental in nature over concerns in Greece and China,” Matt Maley, equity strategist for Miller Tabak & Co, said in a Bloomberg article.
Silver gains are pulling ahead as traders snap up the relative cheaper precious metal. Over the past four decades, the silver-to-gold ratio has hovered around 55-to-1, or the value of 55 ounces of silver to the value of one ounce of gold.
According to Kitco, the ratio is up to about 72-to-1. The higher ratio reveals that either silver is too cheap or gold is too expensive on a historical basis. COMEX silver futures are at $17.1 per ounce while COMEX gold futures are at $1,232.7 per ounce. [Surprises From Silver ETFs? Maybe]