Why silver is the new gold
The silver price is still below its record level, while gold is trading near its all-time high. If the gold/silver ratio falls below 78, it could give silver a sustainable bullish trend and potentially push the silver price towards multi-year highs. This leads many to say that silver is the new gold.
Unlike the price of gold, silver is trading well below its all-time high.
The silver price has enjoyed strong support in recent months and moved towards the USD 26.00 level. While gold is close to its record level of USD 2075, which was reached already in 2020, silver remains far below its record level. Silver peaked at USD 49.81 in April 2011 and has never been close to these levels since.
This year, silver has a chance to gain sustainable upward momentum as traders focus on the problems with US banks and search for assets that can act as a refuge. Gold is already trading near all-time highs, which is positive for silver. Meanwhile, the gold/silver ratio has settled near the strong support in the 78-80 range. Many traders use the gold/silver ratio as an additional indicator for their decision-making.
Source: The Viking
While the gold/silver ratio is simply a numerical indication of how many troy ounces of silver can be bought with one troy ounce of gold, it has its technical levels that serve as entry points. If the gold/silver ratio manages to fall below the 78 level, it will have a good chance of gaining strong downward momentum and heading for yearly lows at the 75 level. This scenario is positive for silver.
Looking at the big picture, silver reached its all-time high at a time when the gold/silver ratio was falling towards the 32 level. While this was an extreme development, it is clear that the gold/silver ratio has plenty of room to move lower if the right catalysts emerge. As gold becomes more expensive, investors can focus on silver, which is relatively cheaper, and push it towards multi-year highs.
Source: The Viking
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