Commodities
Silver's Contradictory Paradox: Undervalued Yet Struggling with Supply Deficits
The silver market is facing a paradoxical situation where the metal's valuation signal suggests it's undervalued relative to gold, but its physical market is struggling with supply deficits.
The gold-silver ratio has widened to 69.7, which is well above its long-term average of 60, indicating that silver looks cheap compared to gold.
However, this situation is complicated by the fact that silver's sensitivity to interest rate expectations and economic growth concerns has left it more exposed to headwinds battering the broader precious metals complex.
The recent escalation in oil prices has added fresh momentum to these headwinds, pushing silver prices below the psychologically important $60 threshold.