Silver Moving In Leverage As Compared To Gold

  • Apr 18, 2019 AEST
  • Team Kalkine
Silver Moving In Leverage As Compared To Gold

Silver prices inched up higher than gold amid its industrial status. The COMEX Silver Futures recovered from the level of $14.795 (Day’s low on 15th April 2019) to the level of $15.057 (Day’s high on 17th April 2019). The prices are currently hovering around $14.912.

The factor which supported the silver prices was the improvement in Chinese figures; the industrial output in China improved significantly, and the industrial application of silver supported its prices. However, the prices further dropped from the level of $15.057 to the level of $14.898 (Day’s low on 18th April).

As per the data, the manufacturing index in China moved above the mean value of 50, which in turn marked an economic expansion and supported the base-metal prices; however, the economic expansion of China exerted pressure on both gold and silver prices previously.

However, the recent data suggested an improvement in China’s industrial activity, which in turn, supported the silver prices in the global market, and silver performed better than gold, as per the gold-to-silver ratio (XAU/XAG). The gold-to-silver ration plunged from the level of 86.52 (Day’s high on 11th April 2019) to the level of 84.56 (Day’s low on 17th April); the fall in the ratio suggested the outperformance of silver prices as compared to gold prices.

The silver and its implication in renewable energy (especially Solar Cells) is keeping the silver prices above the gold, as major economies across the globe are shifting their economies toward zero-emission economies. The increased stance of economies around the world to curb the harmful emission in line with Euro 6 standards is marking a demand for silver, which in turn, is supporting the silver prices. The silver lost its charm previously as compared to gold amid poor quality of job creation in the United States.

Silver Market Trends in 2019:

The significant industrial demand for silver is coming from industrial fabrication (approx. 60% of total demand) in 2019. As per the Silver Institute, the demand for silver is forecasted to rise modestly in the year 2019, from brazing alloys, solders, electrical applications, etc.

The Silver Institute also mentioned that the Photovoltaic (PV) demand in recent years improved drastically as various countries add renewable energy (Solar Energy) in their energy-generating portfolio. The addition of PV cells allow the energy-generation process to be free from conventional fossil fuels methods.

The silver demand is expected to remain steady amid the demand for renewable energy and the use of silver in making PV cells. The higher status and incentive provided by the various governments to adopt renewable energy methods might to support the silver prices over the long-run.

As per a report from the Silver Institute, India is expected to consume the highest level of silver in the year 2019 amid demand for jewellery in India, and application of silver jewellery as a substitute for low-grade gold jewellery. The silver import in India stood at 225 million ounces in the year 2018, up by 35% as compared to the imports in the year 2017.

In a nutshell, the status of silver as bullion and as an investment hedge is exerting pressure on silver prices amid improvement in global economic conditions; however, the industrial application of silver is keeping the prices in leverage to gold prices, which is evident by the XAU/XAG ratio.


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