In times of market volatility, investors look to gold and other commodities in their flight to safety. With the unstable mood swings of oil prices, the uncertainty of the equities markets, and just a flat out distrust of currencies, most investors have found some comfort in owning gold. The ramp up in gold prices has been nothing short of astronomical. The price of gold has more than doubled since 2007, and many gold bugs anticipate more room to move up. No shock there.
But as gold's momentum seemingly levels off--albeit, still very much on an uptrend--more and more precious metals investors are noticing that silver now routinely outperforms gold, and has been doing so for well over a year. While gold has increased roughly a quarter in value over the past year, silver has more than doubled its value.
Some investors use a basic strategy known as the gold-silver ratio to gauge buy and sell indicators in precious metals. Basically, take the price of gold and divide it by the price of silver. Generally, if the ratio is too far on one end of the spectrum, it's an indication for a trade. A ratio of over 100 would suggest that gold prices may be too high as compared to the price of silver. A ratio of 50 or below, would suggest it may be a good time to buy gold.
With gold trading around $1425 today and silver at $37, the ratio of 38 would suggest that perhaps investors have swung a little too far towards silver. But the question is if investors are ready to make a change in their buying trends. The price relationship between gold and silver is one to watch closely, especially as the rest of the financial markets outside of precious metals continues to develop so volatility.
Here are a few of the more popular gold and silver stocks and ETFs to keep your eye on:
- Barrick Gold Corp. (NYSE: ABX)
- AngloGold Ashanti Ltd. (NYSE: AU)
- Newmont Mining Corp. (NYSE: NEM)
- Jaguar Mining Inc. (NYSE: JAG)
- Kinross Gold Corporation (NYSE: KGC)
- SPDR Gold Shares (NYSE: GLD)
- Market Vectors Gold Miners ETF (NYSE: GDX)
- Market Vectors Junior Gold Miners ETF (NYSE: GDXJ)
- iShares Gold Trust (NYSE: IAU)
- Silver Wheaton Corp. (NYSE: SLW)
- Coeur d`Alene Mines Corporation (NYSE: CDE)
- Hecla Mining Co. (NYSE: HL)
- Silver Standard Resources Inc. (NASDAQ: SSRI)
- Pan American Silver Corp. (NASDAQ: PAAS)
- iShares Silver Trust (NYSE: SLV)
- ETFS Physical Silver Shares (NYSE: SIVR)
- Global X Silver Miners ETF (NYSE: SIL)
- ProShares Ultra Silver (NYSE: AGQ)
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