Silver cheapest versus gold since September 2010

via Commerzbank
Accompanied by continuing ETF outflows – yesterday saw holdings in the gold ETFs tracked by Bloomberg reduced by a further 22.5 tons – the gold price has fallen by around 1%. The US dollar, which appreciated against the euro on the back of weak economic data in the eurozone, also weighed on precious metal prices. Silver shed 2% yesterday on a closing price basis. For a time, the white precious metal came close to the two-year low of $22 per troy ounce that it recorded last week.

Although silver has risen again this morning, it has so far not been able to achieve any significant price recovery following last week’s slump – in contrast to gold. Unlike gold, the slide in the price of silver was also not accompanied by noticeable outflows from the ETFs, their holdings having been only slightly reduced in recent weeks. In fact, they have actually seen inflows of 525 tons since the beginning of the year.

The relative weakness of the silver price – the gold/silver ratio has climbed back above 60 for the first time since September 2010 – is thus more likely attributable to weaker industrial demand, which accounts for more than 50% of fabrication demand. This is also confirmed by figures from China: in March, China imported 196 tons of silver, 23% down on the year-on-year figure. First-quarter silver imports were a good 2% below the previous year’s level. The Silver Institute will be publishing its “World Silver Survey” on the global silver market situation later today.