Why Silver is the new Gold: Opportunity for Sustainable Upside Momentum

Vladimir Zernov
Updated: May 10, 2023, 08:11 UTC

Silver remains below its all-time high while gold is trading near its record levels. If the gold/silver ratio drops below 78, it could give silver a sustainable bullish trend and potentially push it towards multi-year highs.


In this article:

Key Insights

  • Silver gained strong upside momentum in recent months but remains cheap compared to gold. 
  • Demand for precious metals is rising as traders search for safe-haven assets amid a banking crisis in the U.S. 
  • If gold/silver ratio settles below the 78 level, silver may gain strong upside momentum.

Unlike Gold, Silver Settled Well Below Its All-Time High Levels

Silver enjoyed strong support in recent months and moved toward the $26.00 level. While gold is close to its all-time high of $2075, which was reached back in 2020, silver stays well below its record level. Silver touched highs at $49.81 in April 2011 and has never moved close to these levels.

This year, silver has a chance to gain sustainable upside momentum as traders focus on the problems of U.S. banks and search for safe-haven assets. Gold is already trading near all-time high levels, which is bullish for silver. Meanwhile, the gold/silver ratio has settled near the strong support in the 78 – 80 range. Many traders use the gold/silver ratio as an additional indicator for their decision-making.

Gold/Silver Ratio May Move Towards The 75 Level

While the gold/silver ratio is simply a numerical indication of how many ounces of silver can be bought with one ounce of gold, it has its technical levels which serve as entry points. In case the gold/silver ratio manages to settle below the 78 level, it will have a good chance to gain strong downside momentum and move toward yearly lows at the 75 level. This scenario is bullish for silver.

Taking a look at the big picture, silver reached its all-time high at a time when the gold/silver ratio declined towards the 32 level. While this was an extreme development, it is obvious that the gold/silver ratio has plenty of room to move lower in case the right catalysts emerge. As gold gets more expensive, investors may focus on silver, which is relatively cheaper, and push it toward multi-year highs.

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About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

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