Silver Divergence Trading Back-Test #Trading #Stocks

Topic - Silver Divergence Trading Back-Test

Silver prices have been falling, more so than gold. This is called divergence. There are a few reasons for a divergence between the movement of gold and silver prices. One is the gold/silver ratio, a method traders use to assess the value of one metal to the other.

Last week, Citigroup analysts published a report calling for silver to reach $30 per ounce within 9 months.

Could Citigroup be exaggerating or on target? Today's silver spot price is about $23.50 per ounce; so a move to $30.00 would be a 28% jump.

Let's look at a few data sets that augur for higher silver prices:

Throughout human history, about 8.5 ounces of silver have been extracted from the earth for every one ounce of gold.

According to the World Gold Council, an estimated 208,874 tonnes of gold have been mined.

The distribution of gold above ground is as follows:

Jewelry: 46%
Bars and coins: 22%
Central banks: 17%
Other: 15%
According to the U.S. Geological Survey (USGS), about 1.74 million metric tons of silver have been mined.

Here are the top five uses of silver by percentage, including bullion, solar, jewelry, and electronics:

Jewelry: 40%
Electronics: 25%
Industrial: 15%
Bullion: 10%
Other: (art, religious objects, currency) 10%
The gold-to-silver price ratio is influenced by supply-and-demand trends, macroeconomic conditions, and investor sentiment. In particular, industrial demand is an enormous tailwind for silver.