Gold/Silver Ratio Favors Gold

One of the main reasons why silver acts so sluggish relative to gold is a function of the gold/silver ratio, which shows that gold has been outperforming silver since March 2011.

Based on the enclosed chart, it likely will continue to do so for a while longer, as the ratio continues to climb to at least 65 to 1, and possibly up to 75 to 1.

This means that when the precious metals are strong, gold will climb by a greater percentage, and when the precious metals are weaker, gold will decline by a lesser percentage than silver, probably for the next few weeks. ETF traders may want to watch the iShares Silver Trust (SLV) and SPDR Gold Shares (GLD).

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