Gold vs Silver: Current potential

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A big thank you to EODHD.com for the data of XAUUSD and XAGUSD. Quality data at affordable price.


 In times of uncertainty, investors turn to Gold. But spot Gold is now around USD4000 per troy ounce. On my trip down to www.indigopreciousmetals.com to buy bullion, I saw many people now buying Silver. Old folks, rich Indonesians and rich Indians. Why? Silver is not a Central Banks reserve currency like Gold, but it also has many industrial uses: See screenshot below. Besides the price of silver is only USD52 per troy ounce. XAU is Gold spot price XAG is Silver spot price. The 40 days ahead median forecast price for XAU is USD4208 and for XAG is 53.46. See charts below. [for methodology on Quantile Forecasts using Gradient-Boosted Decision Trees see previous recent posts on this blog]. What is interesting is that proportionally speaking XAG has more potential than XAU. (The redline of XAG sits nearer the top of the green forecast band box.) And so if you look at the third chart below where XAU and XAG are plotted on the same chart as percentage change you see XAG catching up. A popular strategy followed by Gold/Silver investors is the 80/50 Gold/Silver ratio so when Gold price exceeds 80 its overvalued and time to buy Silver. When Silver is above 50, switch to Gold. So using current prices, 4000/52 = 76.9. What price will Gold  be 80? 80/76.9 x 4000= 4161. And the breakout price for Silver is: 4161/4000 x 52 =54.






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