The coronavirus crisis is shattering our workday culture and battering Wall Street but it’s also influencing the precious-metals market in a very interesting way: the price of gold rose dramatically, just as silver’s price plunged. That means there is no better time to trade your gold for silver than right now.
Gold prices have pushed higher reaching well above $1,500 US an ounce as the Federal Reserve announced new measures on Tuesday to inject more liquidity into the economy. The market crisis caused by the coronavirus is prompting the Fed to take a more aggressive stance than it did during the 2008 financial crisis, and even more so than it did earlier this year when news of the virus’s arrival in the US took over headlines.
Silver is down 28% in the past eight sessions, the worst streak since 1983. Some market analysts are not ruling out lower prices in the near-term, as Kitco News writes.
“Silver trading below $15 definitely has a lot of bad news priced in but the question investors are asking is: ‘How bad is bad’,” said David Madden, senior market analyst at CMC Markets. “The bad news can still be worse.”
Silver is losing more ground than gold but the pattern isn’t too surprising, as silver has been underperforming gold this year. Thing is, what’s remarkable about this week is that the ratio of gold to silver is the highest it’s been for 5,120 years.
That ratio reached 119 on Tuesday, down from 124 on Monday, but still at an unprecedented level.
Wait, what is the silver-gold ratio? A quick explanation is that it measures the relative strength of gold versus silver prices. It shows how many ounces of silver it takes to buy one ounce of gold.
To get this number, you divide the current gold price by the current silver price.
More often than not, that number hovers in the 40 to 50 mark, but in 2013 that number doubled to 80. Now in the 100s, silver is in high demand. Historically, that number corrects itself, so investing in silver now is very attractive to precious-metals observers.
This is nothing new. Analysts, traders, and investors look to “trade the ratio” at certain points, such as buying silver when the ratio is high and switching to gold when it falls.
A Kitco report notes, “At this time, it’s too early to say what combination of price levels will be seen at the final bottom, but we can say that the way gold reacted recently and how it relates to everything else in the world, makes gold likely to decline in the following months. Silver is likely to fall as well and it’s unlikely that a local top in the gold to silver ratio will prevent further declines.”
Today, there is no better time to trade your gold for silver. Whether you have gold bullion, jewellery, coins or scrap, bring your gold to a reputable buyer where you can exchange it for silver. Buy low, sell high, right?
The ratio will balance out since silver and gold are joined at the hip. When is anyone’s guess, so be wary of analysts letting you know exactly what will happen to the price of gold and silver and the ratio.
What makes silver attractive is also its many uses. The white metal is also employed in solar rays, cellphone batteries, medical equipment, and much more. It is also alloyed with such elements as nickel or palladium to work as electrical contacts. Silver also finds favour for its unique ability to convert ethylene to ethylene oxide, which is a precursor of many organic compounds.
If you want to gobble up some silver, you should move fast, and expect that some products may be unavailable. If you opt for a product beyond bullion, be prepared for bad news.
It’s being reported that the US Mint sent out the below message to buyers yesterday saying that:
This is to inform you that we have temporarily sold out of American Eagle silver eagle bullions. Our rate of sale in just the first part of March exceeds 300% of what was sold last month.
We are in the midst of precarious uncertain times, and many people find safe haven with precious metals. As a public health crisis rockets from continent to continent, it would be advisable to sell your gold for silver to respected and experienced buyers such as Muzeum if you want a fair return for your items.