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Does MM prefer Gold or Silver?

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Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

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    Does MM prefer Gold or Silver?

    Hi James,
    I came across an article during the week and found this graph interesting. Interested in your thoughts as it basically was concluding that whenever the spread had become this large it was inevitable for a catch up in the gap.
    What are your thoughts on Silver from here in comparison to Gold?

    Answer

    Hi Scott,

    That chart certainly tells a tale but of course we don’t know if sliver will eventually trade higher towards gold, or gold will infract fall down towards silver. At this point in time MM prefers sliver over gold from a pure demand perspective:

    • The worlds gold stock is  around 21 cubic metres, it simply sits in storage collecting dust – it actually costs money to protect it!
    • Conversely silver is now used in solar technology, electronics, water purification, cars as well as jewelry.

    The way the play the spread would be to short gold & buy Silver in a pairs trade.

     

    chart
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    Gold weekly w Silver overlayed
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