Investment of the Year: Silver
Source: One Financial Markets (10/4/10)
"Gold:silver ratio is currently under 60 for first time in 11 months."
Investors placing CFD spreads may wish to pay close attention to silver prices, which have outperformed gold so far this year, jumping by 31% to reach a 30-year high.
According to the Telegraph, the gold-silver ratio—the number of ounces of silver required to buy an ounce of gold—is currently under 60 for the first time in 11 months.
Gold is trading at $1,317, while silver costs just $22.11 an ounce at present, making for a ratio of 59.6.
However, the newspaper points out that this figure historically tends to settle at around 40, suggesting that silver is currently undervalued against gold and will rise in the coming months and years accordingly.
James Turk, founder of bullion dealer GoldMoney, suggested that quantitative easing will push the value of precious metals including silver and gold even higher as paper currency is devalued.
"Just pick up your newspaper to see what central banks are doing to destroy currencies," he told the newspaper. "Unlike the 1970s, there are no safe havens from currency debasement—such as the deutschemark."
However, Barclays Capital's Suki Cooper suggested that silver prices will peak in the second quarter at just $23.7 an ounce, due to the fact that supply continues to rise quicker than industrial demand, meaning that the precious metal is in surplus.