Goldman said in an April 13 report that in the long term, silver tends to track gold, and its forecast reflects the historical ratio to gold. An ounce of gold bought 67.21 ounces of silver in London yesterday, the highest since July. The average over the past 30 years is 64.8.
The link with gold is stronger than that with industrial metals. The mean of silver’s 30-week correlation coefficient to gold was 0.86 over the past five years, compared with 0.51 with the London Metal Exchange Index of industrial metals, data compiled by Bloomberg show. A figure of 1 means two assets always move in the same direction.
“The precious-metal characteristic is likely to dominate,” said Barnabas Gan, an analyst at Oversea-Chinese Banking Corp. in Singapore, and the second-most accurate precious metals forecaster over the past two years. “The risk of higher real interest rates may likely magnify in the middle- long run, and thus raises the opportunity cost for holding silver. The improving global economic picture is also likely to pale safe-haven demand.”