Silver and Gold Price, Stocks, and Coronavirus Updates

Last update: 3/13/20

Gold/Silver Ratio Reaches All-Time High!

Silver has seen significant selling pressure in this volatile market. However, demand has not yet capped off with silver either. In fact, the gold-silver-ratio saw an all-time high on Thursday over 100, nearly 103. This is the highest in history and has not reached such highs since 1991.  What this ratio defines is the amount of silver it takes to purchase gold. Because of this record high over 100, this means about 100oz of silver buys 1oz of gold. Silver is becoming more attractive to investors now because it is more affordable than gold. The coronavirus panic selling of stocks and other assets also contributes to this growing demand.  It is still possible for silver prices to drop despite this high. Some analysts believe if the coronavirus spread continues to weaken the global economic growth, demand will drop. However, Andrew Hect, the creator of Hect Commodity Report, stated: “The long-term quarterly chart illustrates that both price momentum and relative strength indicators are barely above neutral reading with plenty of room to move higher. Buying silver during price corrections has been the optimal approach to the market. Silver continues to try the patience of investors who are waiting for it to follow gold and break above its 2016 high.”

What's going on with the stock market?

Normally when stocks are down, precious metals demand goes up. The S&P 500 started Thursday morning off already down 8%, triggering the level one circuit breaker halt on 3/12/20. The Dow Jones ended its 11-year record-breaking bull market streak and dipped into a bear market. The Nasdaq Composite is also down 7%. As this is being written, the European stock losses extend down 9.7% and is making headlines as ‘on track for the worst day ever.’ Despite all this, and the usual inverse relationship precious metals have with stock, the gold price continues to drop. 

Why is the gold price down if stocks are down?

The answer to this question is only a theory. If we look back to what happened in 2008, we can see that stocks plummeted, and so did precious metals.  Investors’ main concern is what happens with consumer spending if everyone is staying home to avoid the coronavirus. What economists are theorizing right now is major companies and investors are selling everything to deal with the continuing spread of the coronavirus. Trump’s address did little to quell investors’ fears about the government’s response to combat the economic slowdown of the stock market. Therefore, as an economic plan goes to Congress, investors are selling everything. This might include precious metals. 

What could happen next to the gold price?

Returning to the 2008 recession, the gold price also fell with the stock market. However, If we look a little further into the future, the gold price and other precious metals jumped back up again. The gold price even reached all-time highs soon after this plunge as banks used gold for collateral.  So, yes, the gold price might be dropping now. But that does not mean it is not possible to spike right back up again. It is subject to fluctuation during this uncertain time. Investors and large institutions seem to now be taking everything off the table to try and avoid suffering similar to the 2008 stock market crash.    Disclaimer: This article is not meant to serve as professional economic advice. Any action you take upon the information from this article and website is strictly at your own risk.

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