Silver up sharply again today – posts 4% gain since last Thursday

Silver up sharply again today – posts 4% gain since last Thursday by Michael Korases for USA Gold

Gold continues to muster support in and around the $1400 mark, but silver of late has begun to show the early signs of renewed strength.  The former is trading at $1408.50 on the day – up $3. The latter is up another 18¢ at $15.73. Today’s upside follows the two previous days’ increases that came despite gold’s sluggish performance.  Silver is up almost 4% since last Thursday while gold is up less than 0.5% – an unexpected turn of events.

In Monday’s DMR (Chart note), we cited silver’s lag with respect to gold and made a point worth repeating: “We will point out for the record though that silver lagged gold’s run early in the years of the credit crisis. It played catch-up, however, as the rally in precious metals prices unfolded over the next three years.  In November 2008, the gold ratio was 80 to 1.  By April 2011, it was 30 to 1.”  Even so, we are still surprised by silver’s “breakout” of the past few days – driven, we think, by its underpricing relative to gold and some judicious, proactive short covering.

Quote of the Day
“As central banks have upped their ante to gold, investors searching for ways to optimize portfolio outcomes might ask if they could potentially benefit by taking a page from the central bank playbook—using gold to diversify their own portfolios.” – Juan Carlos Antigas, World Gold Council

Chart of the Day

Image courtesy of HowMuch.net (Click to enlarge)

Chart note:  “In 2010,” says HowMuch, “the world’s central banks stopped selling gold and started accumulating it. As gold provides a hedge against economic uncertainty and currency manipulation, the action of these central banks gives us insight as to which countries are most capable of handling an economic storm. . .A common theme in economics is ‘those who own the gold make the rules.’ Recent statistics suggest a large disparity between the top gold holders in the world and those governments holding less of the yellow metal.”

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