There are a number of reasons that silver should revert to the long term historical mean but the two primary ones are the fact that geologically in the earth’s crust there are fifteen parts of silver to every one part of gold.
Spot gold traded nearly flat on Monday in Asia and has edged higher as investors nervously await a string of economic data this week to examine if the grand money printing recovery plan is working for the world's top economies.
Gold inched down near $1,700/oz on Friday after a drop through its support level at $1,710-$1,712 initiated stop loss selling. Better than expected employment data was seen as potentially negative for gold.
Gold continued gains on Friday receiving a boost from Angela Merkel saying she supported “Super” Mario Draghi’s pledge “to do whatever it takes” to save the euro. While this sentiment lifted markets, some investors hope action is sooner than later.
Gold is gaining ahead of the Greek government’s debt acceptance deadline and European interest rate decisions later today. Market participants expect that central banks will continue to maintain ultra-loose monetary policies to promote growth.
German lawmakers are to review Bundesbank controls of and management of Germany’s gold reserves. Parliament’s budget committee will assess bullion bars that are believed to be stored in Frankfurt, Paris, London and New York.
Spot gold has risen more than 1% today after the sharp drop yesterday as Asian jewelers, traders and investors rushed to take advantage of attractive prices. Gold in Europe remains near the highs seen in Asian trade and is now trading at $ 1,718.38/oz.