Silver's Golden Opportunity: Is the Gold-Silver Ratio Signaling a Buy?

Silver gained sharply more than 15% following the footsteps of gold. It hit a high of $33.11 and is currently trading around $32.34.

Retail Sales Surge Amid Tariff Fears

US March 2025 retail sales rose 1.4% from February, more than the expected 1.2% rise and marking the highest growth since January 2023. Most of this growth was achieved through a 5.3% rise in the sale of motor vehicles and auto parts due to consumers pre-buying ahead of tariff increases being expected. Without autos, retail sales still rose 0.5%, while core retail sales, excluding autos, gasoline, building materials, and food services, rose 1.0%, improving over the expected 0.2%. This data indicates strong consumer demand and a good retail sector in spite of economic uncertainty and tariffs.

Powell's Patience: Tariffs Cloud Fed's Outlook

Speaking on April 16, 2025, at the Economic Club of Chicago, Federal Reserve Chairman Jerome Powell adopted a conservative, wait-and-see approach to monetary policy, citing significant uncertainties created by President Trump's policies towards tariffs. He explained that the Fed is going to sit on its hands on interest rates until more data can be used to assess the tariffs' influence on inflation and growth, aware that tariffs have the potential to raise inflation and lower growth simultaneously, making it tricky for the Fed's dual mandate. Powell excluded the need for a "Fed put" amidst market volatilities, assured the vigor of the labor market, and pointed to the importance of anchored inflation expectations, citing evidence of a slowing economy in the first quarter. His words disappointed expectations of rate cuts, leaving on the table the possibility of eventual rate hikes if tariffs impose persistent inflation pressures

Silver Undervalued? The Gold-Silver Ratio's Tale

As of mid-April 2025 writing, the gold-silver ratio is approximately 100:1 as gold is trading near $3,300 an ounce and silver near $33 an ounce, so silver looks quite undervalued compared to gold when looking at historical averages such as the late 1980s rate of 70:1.

Trading Strategy and Key Levels for Silver

The commodity is trading above the short term (34 and 55 EMA) and long-term moving average (200- EMA) in the 4-hour chart. The near-term support is around $31.85 and any violation below will drag the commodity to $31.25/$30.75/$30/$29.60/$29/$28.40. The immediate resistance is at $33.20 any breach above targets $34/$35/$36.

It is good to buy on dips around $32 with a stop-loss at $31.25 for a TP of $35.