Gold and silver are climbing again after both crashed from record highs earlier this year, and the gold-silver ratio now sits near 67. Historically, that ratio may tip toward gold when investors grow more worried about the economy, which is why one analyst favors the SPDR Gold Shares fund over silver right now.
Gold and silver hit record highs earlier this year before crashing sharply in the months that followed. The turning point, according to the source, was the announcement that Kevin Warsh was President Trump's nominee for the Fed chair position, which appeared to inject stability into the stock market and triggered the pullback in both metals. Neither metal has reclaimed its January peak, but both have been rising in recent weeks.
The gold-silver ratio points to gold
The gold-silver ratio measures how many ounces of silver it takes to buy one ounce of gold. It currently sits at about 67, with gold trading around $4,400 per ounce and silver at $66 an ounce.
The ratio tends to tip further toward gold when economic concern grows, since gold is often seen as the ultimate safe-haven asset because of its role as a store of value. During the 2020 pandemic panic, the ratio spiked to over 110, and it reached a high of around 80 during the Great Recession. With the ratio now below 70, there may be room for gold to climb further if economic conditions worsen.
SPDR Gold Shares as a portfolio hedge
For investors concerned about that possibility, tracking gold through the SPDR Gold Shares fund can be an attractive option. The fund is up just 2% this year, though it has risen alongside gold's recent gains. It carries $144 billion in assets under management and a 0.40% expense ratio.
Gold prices can be volatile since so much depends on market risk and investor sentiment, so the fund may not be a safe investment on its own given its potentially wild swings. It can, however, serve as a hedge against market uncertainty. Silver can serve a similar purpose, but the source's analyst argues gold's track record during economic uncertainty makes it the more compelling choice today.
Source: The Motley Fool
Trading involves risk.
Risk Disclaimer
