The Gold-Silver Price Ratio is Closing and Turning Investor Interest Toward Silver Stocks
FN Media Group Presents Microsmallcap.com Market Commentary
NEW YORK, May 28, 2020 /PRNewswire/ -- The silver price is gaining traction, bringing the gold-silver price ratio down from historical highs and creating a ton of buzz around the silver market. It seems that silver is starting to catch up with rising gold prices and analysts expect the white precious metal to outperform gold for the next few years. The gold price has been rallying since the beginning of the year due to market volatility and economic slowdown, sending gold giants like Barrick Gold (NYSE:GOLD) (TSX:ABX) soaring along with it. During the first quarter, silver price lagged behind due to its perceived industrial demand. Luckily, thanks to the reopening of economies around the world, silver is expected to shine in Q2 and beyond, putting silver stocks like Endeavour Silver Corp. (NYSE:EXK) (TSX:EDR), Wheaton Precious Metals (NYSE:WPM) (TSX:WPM), Coeur Mining, Inc. (NYSE:CDE), and First Majestic Silver Corp. (NYSE:AG) (TSX:FR) in the spotlight.
Although the global pandemic has put a damper on the markets overall, the safe-haven status of gold and silver has injected new life into the precious metals market and these companies are ready for their time to shine.
Gold-Price Ratio Drops From Historical Highs
The gold-silver price ratio recently hit a historical peak of 124:1, marking a drastically higher margin than the average 87:1 ratio in 2019. The ratio is now floating around the 100:1 mark, which still reveals a wider-than-ever margin between the precious metals and signals a potential reset in the months to come.
After a tough first quarter which sent silver price below $12 an ounce, the white metal is making a comeback and is up 6.7% since the beginning of May. The uptick is encouraging for silver market enthusiasts, but it could only be the beginning for the undervalued metal. According to analysts at CIBC, silver will average around $18 an ounce in 2020 and $19 the following year. The sentiment is much the same for other financial institutions, including Bank of Montreal, CPM Group and Silver Institute, although some are suggesting prices as high as $22 this year.