Equities were the champs last month, and during the first half, as well as on a year over year basis.

The precious group did pretty well too, but the nonferrous guys are, and have been in the dog house.

The charts tell the grim story for the nonferrous team, with some falling to new recent lows, and all trading below their respective five month moving averages.

In the precious metals department, gold got through rock solid resistance to average $1,359.67 during June, its highest level since 2013.

Interestingly, something odd seems to be occurring with silver and gold.

A few weeks ago, (6/7/2019) it was noted that the silver / gold ratio stood at 90.

That is to say, 1 ounce of gold bought 90 ounces of silver, up from 30 ounces in 2011.

This observation cranked up our curiosity, got the mental metal gears in motion and started the wheels turning. So we looked back further in time, which brings us to the first two charts in this month’s report.

The first chart illustrates the annual average prices for silver and gold over the past fifty years or so.

Generally speaking, as you can see, they tend to move in the same direction, but not in lockstep.

The second chart shows the silver / gold ratio, which stands at 86 during the first half of 2019, its highest reading since 1993.

The curiosity though is found in the first chart, and how these two have behaved over the past few years.

Gold has been rising, while silver has been falling.

Spot gold averaged $1,159.91 on Comex during 2015, while the 2019 YTD average is $1,305.95, representing a $146.04, or 12.6% increase.

Silver averaged $15.68 in 2015, but this year it stands at $15.18, down $.50, or 3.2%.

Further, over each of the past three years, the annual average price of gold has risen, while silver has fallen.

Fifty years of history tells us that silver and gold should not be diverging as they have been.

So, the question is: ‘will gold come down, or is silver going to take off’?

Regards,
John E Gross

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