SMM News: according to historical performance, whenever the ratio of gold to silver is significantly higher than 70 to 75, it means that the bottom of the silver price appears. Now the ratio of gold to silver has broken through a 20-year high, reaching about 92%! The ratio is likely to be a phased top, with large adjustments in the future to return to normal levels below 80, and silver prices are likely to strengthen, given that the Fed's interest rate cut supports gold and oil prices.
The price of gold and silver soared to a 20-year high
Since June this year, the price of gold and silver has been rising. According to Oriental Wealth Choice data, the ratio of gold to silver has now reached about 92, breaking the highest level in the past 20 years and reaching an all-time high.
The ratio of gold to silver reflects the rise and fall of the unilateral market, and when precious metal prices enter a bear market, it is often the beginning of a trend rise in the ratio of gold to silver. In general, when the overall market for precious metals is flat, the ratio of gold to silver tends to continue to rise. But if precious metals form a unilateral trend, silver will rise more than gold, or a fall in the ratio of gold to silver.
In retrospect, since 1968, the price ratio of spot gold to silver in London has fluctuated between 15 and 100, with an average of about 55, with the highest in February 1991, 100 in gold and silver and the lowest in January 1980. The ratio of gold to silver is 15.
If combined with the historical market, the highest position often appears in the concussion city where there is no trend. Between 1980 and 2000, for example, the ratio of gold to silver hit record highs many times.
Between 2012 and 2013, precious metals entered a bear market in anticipation of the Fed's monetary tightening, and the gold-to-silver ratio rose. With the Fed's clear management of interest rate expectations and weak inflation data, the urgency of the Fed to raise interest rates was alleviated. Precious metals then entered a five-year consolidation period. The gold-to-silver ratio also entered an upward trend after bottoming out in 2012 and is now at a relatively high level in history.
Silver is menacing
According to historical performance, whenever the ratio of gold to silver is much higher than normal (usually 70 to 75), this means that the bottom of the silver price appears. When the ratio of gold to silver exceeds 80, the price of silver is too undervalued relative to the price of gold, which is often one of the most reliable buying signals for silver. The current gold-to-silver ratio is likely to be a phased top, and there will be a massive adjustment in the future to return to the normal level below 80, which is bound to strengthen, given that the Fed's interest rate cut supports gold and oil prices. A new round of silver surpassing gold may have begun.
Jeff Clark, a senior analyst at Gold Silver.com, said that if this is the beginning of a sharp fall in gold and silver, then silver may have more room to rise relative to gold. Every reversal of gold and silver has led to a bigger decline than it is now.
Soochow futures analysis pointed out that by the international gold and silver price reached an all-time high, silver set off a supplementary market, while the global easing wave superimposed the rise of non-ferrous metals, further supporting the performance of silver industrial products.
Citic Futures believes that due to weak macroeconomic growth, the resurgence of loose expectations, the high and downward dollar, combined with the lagging impact of quarterly interest rate increases in 2018, the probability of a slowdown in US economic growth has increased, and neutral interest rates are expected to decline. As the Fed steps into a rate-cutting cycle and the value of the dollar comes under pressure, precious metals are expected to enter a bull market again and the ratio of gold to silver can return to the average. In addition, because silver is in the fundamental situation of oversupply, the ratio of gold to silver can return to 80 in a short period of time, but it is difficult to continue to explore substantially.
Galaxy Futures believes that reviewing the performance of gold and silver in the last round of the easing cycle in the United States, gold rose in the front, silver rose after, especially in the middle and late stages of the easing cycle, silver rose significantly ahead. As a result, if the Fed cuts interest rates, affected by financial attributes, gold may still be strong in the early days, but silver will continue to rise later. Judging from the historical data, the ratio of gold to silver has not yet fallen back to a reasonable range, indicating that if the rise of precious metals remains unchanged, the strong rise of silver may continue. However, the judgment of the future market also needs to be based on the Fed's subsequent policy to prevent the arrival of a "fake bull market".
Huatai futures said that silver is cautiously bearish, the current strength of the US index makes precious metals under pressure, coupled with the recent rise in US bond yields, so the current silver price is also recommended to be cautiously bearish.
A-share silver concept stock is ready to move
Affected by the rising price of gold, the A-share gold plate has also been strong in the near future, continuing to be better than the market. The share price of Shandong gold, a leading stock, rose almost at the same time as the futures price of gold, rising 44.43% from 29.17 yuan to 42.13 yuan since May. In addition, Hunan gold, China Gold, Zijin Mining, etc., have also risen to varying degrees.
By contrast, silver concept stocks are relatively inferior. In addition to the better performance of Yintai Resources and Shengda Mining, they rose 14.93% and 10.82% respectively in July, while other silver concepts such as Silver Nonferrous, Gold Silver and Xingye Mining all fell in July. At present, in view of the rising silver futures prices, the silver plate is also likely to make up for the rise.
The Great Wall Securities non-ferrous metals team said that gold prices rose to a seven-year high, the ratio of gold to silver also reached an all-time high, as the ratio of gold to silver rose to the peak, silver thick accumulation and high elasticity appeared. Optimistic about the gold-to-silver ratio to gradually repair the silver bull market opportunities, it is suggested that attention should be paid to Yintai resources, Shengda mining industry.
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