Gold-Silver Ratio Slumps to Six-Week Low as Risk Appetite Grows

March 10 (Bloomberg) -- The ratio of gold to silver tumbled to a six-week low after China said exports soared the most in three years, adding to signs the global economy is recovering.

Silver has outperformed gold as risk appetite improved, according to Andrey Kryuchenkov, an analyst with VTB Capital in London. An ounce of gold buys 64.67 ounces of silver, the lowest amount since Jan. 25 and compared with a seven-month high of 70.88 ounces Feb. 8, according to Bloomberg calculations.

“Silver has industrial uses and tends to perform better than gold in times of economic growth,” said Jia Wei, analyst at Jiangsu Suwu Futures Brokerage Co. “When people are risk- averse they buy gold and when risk appetite increases, silver, or even the platinum group metals, are the preferred choice.”

Gold for immediate delivery has risen 25 percent in the past year, while silver jumped 38 percent. China’s exports rose for a third month, by 46 percent, in February, the customs bureau reported today. This was more than the 38.3 percent median estimate in a Bloomberg News survey of 28 economists.

Technical charts some traders use to forecast movements suggested the gap between gold and silver prices may narrow further as it approaches the 200-day moving average.

Below the 200-day moving average, the early November high together with the August low “is expected to stem the current narrowing flow, for a few days at least,” according to Commerzbank AG.

“If not, the next lower support area around the breached upper 2008-2010 channel line at 61.93 and the lower five month channel support line at 61.57 will be in play,” technical strategist Axel Rudolph wrote in a note yesterday.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net