The “RIGHT WAY” to Invest in Gold and Silver Bullion

How recent divergences in gold and silver’s relationship can guide your investment strategy

Bullion.Directory precious metals guest post 5 March, 2016
By Nick Adamo
President at Bullion Shark LLC

Over the past decade, the sister metals have moved at a 0.81 correlation, and silver usually outperformed gold by 45% on a daily basis.

Recent numbers have not gone along with the norms of the past 10 years but have strayed far from what analysts expected. Since the beginning of 2016, silver has jumped 8% while gold more than doubled that figure at an impressive 17% with 10% attributed to the past 30 days.

David Seaburg even said “Considering how highly correlated silver is to gold, I find it interesting to see such a divergence over the last two to three weeks…”

The recent discrepancy has come as a big surprise to all gold and silver bullion investors.

What is causing this discrepancy? Silver market analysts believe that the quantity of silver’s industrial demand is the most significant cause of this mind blowing reality. Silver’s “industrial metal form” has been taking over for its “precious metal” alter ego.

With recent demand taking a slight hit as in China, a weaker price increase as compared to gold should have been expected. Gold’s performance can be easily bolstered by the recent investor fear that the world markets have instilled in the minds of countless investors.

Many people, who typically put their money into paper assets, are dumping their money into gold to hedge their financial position against a weakening market and inflation. Furthermore, gold has broken above key technical levels and hit a 13 month high last week. These are strong fundamentals that will strengthen sentiment for investors.

What does this mean for the two precious metals from an investment standpoint?

The recent numbers and analysis from various sources point towards gold as a good short term investment and silver proving itself as a potential lucrative avenue in the long run.

With the gold to silver ratio at historical highs, a short gold position and a long position in silver seems like the best option for investors of all levels in the short term.

Overall, both metals should continuously prove themselves as sentiment in the world and U.S. markets continue to worsen.

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