{"id":2366,"date":"2018-08-09T14:59:59","date_gmt":"2018-08-09T13:59:59","guid":{"rendered":"https:\/\/www.ukbullion.com\/blog\/?p=2366"},"modified":"2019-02-21T12:48:36","modified_gmt":"2019-02-21T12:48:36","slug":"is-silver-in-for-a-price-correction","status":"publish","type":"post","link":"https:\/\/www.ukbullion.com\/blog\/is-silver-in-for-a-price-correction\/","title":{"rendered":"Is Silver in for a Price Correction?"},"content":{"rendered":"

While the gold price remains largely constant \u2013 precious metal investors are turning a beady eye over to a silver price chart<\/span><\/a> and wondering what happens next. While we\u2019ve been waxing lyrical about the stagnating gold price<\/span><\/a>, there have been some mighty strange things occurring in the world of silver. <\/span><\/p>\n

So what\u2019s going on with gold and silver?<\/b><\/span><\/p>\n

Some context. <\/span><\/p>\n

The relationship between the gold price<\/span><\/a> and the silver price<\/span><\/a> has historically been of great interest to investors. While there\u2019s no exact \u2018normal ratio\u2019 figure, investors generally think that if one becomes noticeably cheaper or more expensive, relative to the other, then a correction is imminent. <\/span><\/p>\n

As the more volatile of the two, it\u2019s generally silver that jumps or drops in price to \u2018meet\u2019 gold at a healthy ratio \u2013 rather than the other way round. <\/span><\/p>\n

And that\u2019s precisely why there\u2019s so much buzz around silver at the moment. Silver is currently much cheaper, relative to gold, than has historically been the case. If investors are right, then an imminent \u2018correction\u2019 of the silver price would see it soar in value \u2013 potentially very soon. <\/span><\/p>\n

The precious metals golden ratio<\/b><\/span><\/p>\n

Precious metal investors like to think that the \u2018rightful\u2019 ratio between gold and silver is around 16:1, making a troy ounce of gold<\/span><\/a> around 16 times the price of silver. In reality, this hasn\u2019t really been the case for decades \u2013 indeed we haven\u2019t seen a ratio lower than 29:1 since before 1980. <\/span><\/p>\n

Since then, a healthier ratio generally sits between 50:1 and 70:1. Right now, however, it\u2019s fast approaching 80:1. Based on the average annual volatility rates, this is the highest it\u2019s been since 1993. You can see this for yourself on the chart below.<\/span><\/p>\n

\"Gold<\/p>\n

Source:\u00a0 <\/span>https:\/\/www.gold.org\/ &\u00a0<\/span><\/a><\/span>https:\/\/www.quandl.com\/<\/a><\/span><\/p>\n

When the ratio between gold and silver rises, it tends to fall again pretty quickly. There\u2019s no guarantee that prices over the next few months and year will follow historical trends, but if patterns are to repeat themselves, then the price of silver might be about to move very quickly in one direction. <\/span><\/p>\n

The volatility of silver<\/b><\/span><\/p>\n

If that wasn\u2019t all curious enough already \u2013 the average annual volatility rates of silver in 2017 were also at their lowest point since 2000. Generally, silver is a lot more volatile than gold. But by its own standards, silver has been moving at far less precarious a rate over the past 18 months to two years than we\u2019ve seen in quite some time. <\/span><\/p>\n

You can see the volatility rates of silver since 1968 on this chart below.<\/span><\/p>\n

\"Volatility<\/p>\n

Source: https:\/\/www.quandl.com\/<\/span><\/a> <\/span><\/p>\n

Curiouser and curiouser. <\/span><\/p>\n

What happens now?<\/b><\/span><\/p>\n

There\u2019s never a guarantee, but we think that it\u2019s pretty likely that the price of silver is about to rise. Sure, it might not rise tomorrow \u2013 but the fact that it\u2019s behaving strangely by two completely unrelated metrics is nothing if not a warning sign.<\/span><\/p>\n

If the price of silver rises, you\u2019re going to want to have some silver bars<\/span><\/a> or silver coins<\/span><\/a> to sell in order to make the most of the situation. <\/span><\/p>\n

Buy VAT free silver<\/b><\/span><\/p>\n

Where all investment gold is VAT free, investment silver is unfortunately not. This means that in current circumstances the silver price will have to rise by at least 20 per cent before investors can hope to make any returns.<\/span><\/p>\n

To say that this is a cause of frustration to investors is certainly an understatement. With silver being a (historically) more volatile precious metal than gold, the market would otherwise be ripe for short term trading, and investors could take advantage of the quick fluctuations in price. With a blanket floor of 20 per cent on all trading prices however, this is impossible. <\/span><\/p>\n

Luckily, the UKBullion company is currently offering a way of buying VAT free silver. This involves buying the product through the UKBullion Company and storing it in a secure, protected vault until the point of sale. No physical product means no VAT, so you\u2019ll get returns from the full value by which silver appreciates over the period of your ownership. If the price is indeed about to rise, you\u2019ll certainly appreciate this. <\/span><\/p>\n

Contact the team here at UKBullion to find out more.<\/a><\/span><\/p>\n

Have a look over our full range of silver bars<\/span><\/a> and silver coins<\/span><\/a> here. <\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

While the gold price remains largely constant \u2013 precious metal investors are turning a beady eye over to a silver price chart and wondering what happens next. While we\u2019ve been waxing lyrical about the stagnating gold price, there have been some mighty strange things occurring in the world of silver. So what\u2019s going on with gold and silver? Some context. The relationship between the gold price and the silver price has historically been of great interest to investors. While there\u2019s no exact \u2018normal ratio\u2019 figure, investors generally think that if one becomes noticeably cheaper or more expensive, relative to the other, then a correction is imminent. As the more volatile of the two, it\u2019s generally silver that jumps or drops in price to \u2018meet\u2019 gold at a healthy ratio \u2013 rather than the other way round. And that\u2019s precisely why..<\/p>\n","protected":false},"author":1,"featured_media":2367,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[273],"tags":[152],"yoast_head":"\nIs Silver in for a Price Correction? - UKBullion Blog<\/title>\n<meta name=\"description\" content=\"While we\u2019ve all been talking about the gold price, silver has been quietly behaving very strangely. Does that mean we\u2019re in for a price correction? Find out here.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is Silver in for a Price Correction? - UKBullion Blog\" \/>\n<meta property=\"og:description\" content=\"While we\u2019ve all been talking about the gold price, silver has been quietly behaving very strangely. 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