Conversely, gold held up much better than silver during the sharp sell-offs in the metals last year. However, the ratio has stabilized over the past six months with silver taking the lead so far in 2012.
Greg McCoach, publisher of The Mining Speculator, thinks gold and silver ETFs will hit new highs this year on more quantitative easing from central banks, with silver pushing toward $70 an ounce, ETF Daily News reports. Silver would have to double from current levels to hit the forecast as futures were trading over $34 an ounce on Tuesday.
Investment demand for silver has surged following the 2008 credit meltdown and unprecedented moves from central banks to support the economy and financial markets. “If anything, an analysis of the gold/silver ratio offers at least one definitive clue about the gold/silver relationship: traders can expect silver to make more exaggerated moves than gold,” MarketWatch reports. “Historically, the pace of silver’s rise has been greater than gold and the pace of silver’s price fall has also been greater than gold.”
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Full disclosure: Tom Lydon’s clients own SLV and GLD.