With the last trading day of the month concluding we can look at the overall performance of individual assets in the precious metals complex. What we see is a break from the traditional correlation between gold and silver. While both of these precious metals had a stellar month, silver’s price gain dwarfed that of gold. Gold gained a respectable 6% in trading this month; however, silver was able to gain double digit’s with a monthly price advance of 11%.
While it is not unusual for both gold and silver to run in tandem to the upside, with silver having a larger percentage gain than gold, it is unusual for the precious white metal to have percentage gains almost double that that of gold.
One possible underlying force to recent moves in both gold and silver is the economic contraction because of the trade war between the United States and China. This has caused central banks worldwide to lower interest rates and increase monetary liquidity. This action by the global central banks have the net effect of creating bullish sentiment in both equities and precious metals. This is exactly what happened during quantitative easing by the Federal Reserve in 2008. As such both gold and silver are reacting favorably to lower interest rates, however a strong equities market will also highlight the industrial component of silver.
Silver Candlestick Chart 2 Weeks per candle
As of 5:22 PM EDT silver futures gained $0.15 in trading today and closed at $18.48. At the same time gold futures actually lost ½ a percent, or $7.70 closing at $1529.20. In fact, in the precious metals complex gold was the only metal to trade lower on the last trading day of August. Platinum prices surged by 1.76% and palladium gained a robust 4.04%, a $59.50 move that took current pricing to $1531 resulting in palladium once again becoming the most expensive precious metal.
Another interesting component as it relates to gains in gold and silver this month is that gold traded to a 6 ½ year high earlier this week, and although silver’s performance dwarfed the gains on a percentage basis in gold, silvers monthly high matches the monthly high achieved in February 2017.
Wishing you as always, good trading,