Which is better to own right now: Silver or Gold?

The Gold/Silver ratio has been relatively rangebound between 62.066 and 85.82 for the last year. But that doesn't mean there aren't opportunities to trade!

Gold 2

On August 7th, 2020,  Silver (XAG/USD) made an all-time high at 29.857. That was the beginning of a long-term symmetrical triangle!  After pulling back from that high, Silver fell to low of 21.667 on September 24th, 2021.  However, on February 1st the previous high was briefly taken out by a few cents, as the folks at Reddit got behind the precious metal and rallied it from 26.991 all the way to 30.082.  Silver oscillated within the symmetrical triangle until August 6th, when it broke aggressively lower to 22.259.  Price is currently trading roughly $3 beneath than the triangle, however nearing resistance (previous support) at 23.96.  If Silver breaks above, next resistance is at 24.562 and then 25.555.

Source: Tradingview, Stone X

Click here to trade Silver

Gold (XAU/USD) has had similar price action to Silver since putting in a high of 2075.11 on August 7th, 2020.  However, Gold continued to make lower lows until March 31st (whereas Silver was forming higher lows) near 1667.88.  The precious metal moved above the downward trendline to 1916.92 on June 1st, however, has failed to trade higher since.  Price has tested the 1678.88 level 3 times and is currently testing a strong resistance zone between 1805.87 and 1811.18, which is made up of horizontal resistance and the 200 Day Moving Average.  If price breaks above, there is the 61.8% Fibonacci retracement level from the highs of June 1st to the recent touch of 1678.88 near 1825.90 and more horizontal resistance near 1833.95.

Source: Tradingview, Stone X

Click here to trade Gold

Now let’s turn our attention to the Gold/Silver ratio (XAU/XAG).  Over the same timeframe, the ratio has been relatively rangebound between 62.066  and 85.82.  XAU/XAG put in a low at 62.066 on February 1st (the same day Silver made its all time high) and has been moving sideways/higher since.  On July 19th the ratio moved about the 200 Day Moving Average near 70.735 and broke above horizontal resistance on August 18th near 75.332.  On Friday, the ratio managed to trade through the 61.8% Fibonacci retracement level from the September 24th, 2020 highs to the February 1st lows near 76.582.  However, today the ratio has pulled back below. Notice also that the RSI has just pulled back from overbought territory (70) and may be looking to run lower.  If so, gold may underperform Silver in the near-term and Silver will be the relatively better buy than Gold.  However, if the ratio holds 75.332 (former resistance), the ratio could continue to move higher towards the previous highs at 85.52.  If this happens, Gold would be the better precious metal to own relative to Silver.

Source: Tradingview, Stone X

Learn more about the Gold/Silver ratio

With Gold running into a confluence of resistance and the Gold/Silver ratio moving lower today, Silver may be the better option to own in the short-term.  However, if the ratio holds above the 200 Day Moving Average near 70.29 and the RSI can unwind a bit, Gold may be the precious metal to turn to as it may perform Silver in the longer-term.

Learn more about gold and silver trading opportunities.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.