Silver price rose slightly today as investors continued to wait for bank earnings. The earnings will start today when JP Morgan and Wells Fargo will release their first quarter earnings. Investors expect a difficult quarter and a worse forward guidance.
While silver is not directly related with bank earnings, it has a close relationship with gold. In fact, many people refer to silver as gold’s smaller brother. This is partly because they are both precious metals and the price of silver tends to track that of gold.
As I wrote earlier, gold has rallied to a seven-year high as investors prepare for the earnings. The thinking is that if the bank results are weak, many investors will run to gold’s safety. Still, historically, silver has always underperformed gold as shown in the chart below. As a result, the so-called gold to silver ratio recently rose to the highest level in more than 5,000 years.
Silver Has Underperformed Gold Historically
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Silver Price Technical Analysis
Looking at the four-hour chart, we see that silver has been rallying after hitting a YTD low of 11.73 in March this year. The metal’s price has surged to above $15, which is above the 50% Fibonacci Retracement level on the four-hour chart. The price is also along the 50-period exponential moving averages.
I expect the price to continue moving upwards now that it has crossed the 50% retracement level. If it does, the next level to watch will be the 61.8% retracement level of 16.15. This price is also along the 100-period EMA.
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