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Current Silver to Gold Ratio Represents Prime Buying Opportunity as Metals Pull Back

07 May
silver to gold ratio May 2017

Current Silver to Gold Ratio Represents Prime Buying Opportunity as Metals Pull Back

Gold Market Discussion

Current Silver to Gold Ratio Represents Prime Buying Opportunity

silver to gold ratio

The current silver to gold ratio represents a prime buying opportunity. The silver to gold ratio represents the amount of ounces of silver that equates in price to an ounce of gold. It normally sits around 80 to 1, but is at 75 to 1 right now. This is historically an extremely high ratio. The last time the ratio was this high was last year before silver leaped from $16 to $21. Furthermore, previously when the ratio got this skewed was in 2015 as the market bottomed out before rallying last year. We could be headed towards such a rally again now.

What this means for investors: Gold and silver both pulled back this week, which is a reason for this skewing. However opportunities like this should be thought as if precious metals are “on sale.” Prices are low, with the technicals pointing towards a rally, and gold is among the most highly effective long-term investments. Some investment analysts are predicting that even without the “fear factor” that has been heavily driving metals, despite this dip, there are global demand factors to consider for gold’s long-term rally. By Friday, gold reversed and made some small gains to close out the week in the green.


Geopolitical Uncertainty Quieter This Week

Macron
France President-Elect Emmanuel Macron

Lately, gold has been getting a significant boost from uncertainty and fear in the geopolitical sphere. From airstrikes in Syria, ballistic missile tests in North Korea, and diplomatic tension, investors have been looking for safety. This week, however, was quieter on this front (at least in in the mainstream media) with none of the unanticipated events of the previous weeks headlining market impact. In addition, Emmanuel Macron has won in a decisive victory over right wing populist Marine le Pen in the French presidential race. Macron’s more globalist, pro-EU stance has some investors less concerned on volatility.

Instead, some of the most significant market events revolved around the Federal Reserve and Congress. Congress voted to repeal Obamacare, so now the administration has said it will move on to tax reform. Both of these will impact the markets.

Meanwhile the Federal reserve announced this week that it would not raise interest rates, as the economy is showing some weak signs. Previously, the Fed has indicated that there will be a few rate hikes this year. It seems, at least for now, that the warning signs some analysts caution against are halting the Fed. The announcement extended gold’s losses this week.

What this means for investors: Even though there were no major geopolitical events that sparked investor fear as in previous weeks, this does not mean there are not ample reasons to protect wealth with gold now. The elements that have been driving gold are still present. Investors with concerns about how these play out are taking advantage of this week’s dip.

Ron Paul, on Why Fed Action Will Bring Correction

Ron Paul, former presidential candidate, cautioned the current market euphoria on how Fed action, overspending, and constraining monetary policy could bring about a sharp market correction.

What this means for investors: Although there are still enthusiastic investors buying into the stock market rally, as the former Congressman warned, this euphoria cannot last. This is further indication of the opportunity that the gold market dip this week affords for investors.

Oil Tumbles Alongside Gold

oil falling

Gold’s six-week low this week correlated somewhat to oil’s nine-month low this week. There is a saying that as the crude oil market goes, so do most commodities go. Hence, it is not wholly unexpected that the oil slump would weigh on gold prices. OPEC (Organization for Petroleum Exporting Countries) is in talks about production cuts to rebalance the markets, but a consensus has not yet been agreed upon.

What this means for investors: Along with this strain on gold prices, a stronger dollar index this week, and signals of an Emmanuel Macron victory in France also weighed on gold. By Friday, the oil slump, rather than holding back gold, actually pushed up some safe haven demand as uncertainty increased in the markets.


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 Here are some articles from the web discussing the topics in this week’s post:

Current Silver to Gold Ratio Represents Prime Buying Opportunity

Read Here

Geopolitical Uncertainty Quieter This Week

Read Here

Ron Paul, on Why Fed Action Will Bring Correction

Read Here

Oil Tumbles Alongside Gold

Read Here

 


As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”

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