Don't Expect Silver To Continue To Outperform Gold - Capital Economics
(Kitco News)- After alackluster start to the year, silver is starting to show some relative strengthagainst gold but this trend might not last, according to one UK-based researchfirm.
The gold/silverratio has dropped more than 4% since its recent highs two months ago and is currentlytrading at 77.72 points, as silver prices are pushing to a three-week high and aretesting resistance below $17 an ounce, while gold is struggling around $1,300an ounce.
“Silver’s outperformance could be just the white metalplaying catch up with gold after underperforming for most of 2017,” said SimonaGambarini, commodities economist at Capital Economic, in a report Thursday. “What’smore, silver tends to outperform gold when industrial metals prices are alsorising.”
However, Gambarini said that she sees three reasons why silver’soutperformance won’t last: industrial demand is expected to fall as China’seconomy weakens, overall weak silver demand and short-term speculativeinterest.
“Overall, we are happy to reiterate our view that the silverprice will end the year at around $16.00 per ounce, down from $16.85currently,” she said. “Given that we expect the price of gold to end 2018 ataround current levels of $1,300, the gold/silver price ratio should bounce backto 82, up from about 78 today.”
July Comex silver futures last traded at $16.73an ounce, up 0.22% on the day; meanwhile August gold futures last traded at$1,301.40 an ounce, unchanged on the day.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.