UNITED STATES September 20 2016 5:50 PM

NEW YORK (Scrap Register): The strong silver price rally so far in 2016 could be losing steam, said Citi Research. 

The gold-to-silver ratio is now looking oversold, the bank said, after declining substantially since the first quarter, hovering around 66 to 69 since July after the year-to-date high of 84 hit in March. 

The ratio measures how many ounces of silver it takes to buy an ounce of gold, with a smaller number reflecting silver outperformance, and vice-versa. 

At the current ratio, silver prices may look overpriced versus gold, leaving the market poised for a correction, Citi said. Fundamental factors also appear challenged as currency appreciation in key producing regions YTD has done little to curb longer-term supply growth. 

Pan American Silver recently announced that their $164 million mine shaft expansion in Mexico should increase output by 69% to 7.7 million ounces as early as 4Q’17. Thus, despite repeatedly testing $20/oz since the start of 2H’16, we believe silver prices are unlikely to see significant further upside from here, they added.