When will Silver make its 'move'?
Investors familiar with the precious metals sector are used to seeing a pattern in each short-term rally in this market. Silver begins these rallies especially undervalued versus gold, then gains back much of its lost ground by outperforming gold for the duration of the rally.
However, with gold's recent surge we have not seen this typical pattern repeat, which begs the question: why not? Clearly, investors need to gain some understanding of this new, recent behavior in order to decide when/if to increase their investment in what is arguably the most under-priced commodity on the planet.
The easy “answer” is that silver has been held back by its additional status of being an “industrial metal”. Copper, often referred to as an indicator of the strength of the global economy, has leveled-out over the past few weeks – after marching steadily higher for most of the year. By itself, this answer seems inadequate, as silver's superior performance (versus gold) in past rallies has occurred irrespective of moves in the copper market, yet in the current precious metals rally silver is only outperforming gold on days where there is a broader rally in commodities.
