Gold weakens marginally in sympathy with broad sell-off in commodities, silver investment having a very big year in U.S.

(USAGOLD – 11/19/2020) – Gold weakened marginally this morning in sympathy with a broad sell-off in commodity markets and a slightly firmer dollar. It is down $12 at $1863. Silver is down 52¢ at $23.90. With a number of issues still up in the air – including full resolution of the election, the timetable on a vaccine, and a functional fiscal relief plan – the euphoria from last week has given way to a more circumspect mood in financial markets. JP Morgan’s Jamie Dimon spoke for a good many Americans yesterday when he called the inability to agree on a stimulus plan “childish behavior” by our politicians. “Is it $2.2 trillion, $1.5 trillion? You’ve got to be kidding me. Just split the baby and move on,” he added in a report published by Financial Times.”

The Silver Institute released an update on silver supply and demand for 2020 yesterday. Although demand is projected to be down 6% overall in 2020, investment demand is in a sharp upswing, particularly in the United States. “Physical investment,” says SI, “is expected to surge by 27 percent to 236.8 million ounces in 2020, which would be a 5-year high. The largest retail market for bars and coins, the US, will lead the way with a projected 62 percent gain. This reflects the impact of increased price volatility and healthy price expectations.” Too, the Insitute reports a hefty 329% gain in silver ETF stockpiles – an indication of strong fund and institutional interest in the metal.

Chart of the Day

line chart showing the gold-silver ration through 11-13-2020Chart courtesy of TradingView.com • • • Click to enlarge

Chart note: Though the gold-silver ratio has come down from the stratosphere at 112 to one, it is still in an attractive range at 78 to one. “The ratio has corrected from those record-high levels,” says CPM Group, a leading precious metals research firm, “but is still at elevated levels, suggesting more potential upside for silver prices relative to gold. It should be understood that there is no magical number at which this ratio should stand. There are no physical, geologic, chemical, electrical, financial, or other reason why gold and silver should be expected to trade at a given relationship to each other.”

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