James Wesley:
I noticed about two weeks ago, that the chart movement for the price of gold is almost a carbon copy of the price of silver, one goes up, so does the other in almost the same amount. Admittedly two weeks is not a long time but is is still uncanny. The charts are almost identical, only the values are different. Check the Kitco silver chart, and then select the gold chart on the left side then back to silver. Notice the movement is almost identical?
This may not mean anything, but I think the odds are too high for this to be accidental.
Have a good day. – Greg L.
JWR Replies: Yes, it has been well-established that the gold and silver prices do tend to move in harmony. But keep in mind:
1.) The silver market is always more volatile than gold. It has more dramatic swings, because the silver market is much smaller (“thinner”) than the gold market.
and,
2.) The long term ratio between silver and gold prices is gradually changing. Historically it took an average of 16 ounces of silver to buy one ounce of gold. The ratio has swelled to a whopping 66-to-1, in part because of the current sovereign debt crisis that is coincident with a weak economy. (Gold is seen as a safe haven investment, in times of crisis. Meanwhile, silver is currently undervalued, because it is a more industrial metal and hence it gets price depressed in economic downturns.) But since silver is being consumed industrially, while at the same time gold is almost 99% recovered in most uses, the ratio will eventually drop again. This makes silver a better long term investment. (In about 30 years, I predict that the ratio may be back down to something closer to 20:1.)