Gold vs Silver (XAUXAG)

XAUXAG reflects the relation between dollar values of two popular trading instruments, gold and silver. The instrument can show differences in price dynamics and paces of the two metals, showing periods when one of them outperforms another. The character of the price dynamics in recent years can be described as more cyclical than traditional XAUUSD and XAGUSD have, although fluctuations are considerable in periods of economic turbulence, providing high growth opportunities. However periods when a trend prevails can be well extended as well and may follow severe movements. Even in sideways the instrument can be considered for an active investment strategy attempting to catch more gradual reversals.

The chart below reflects recent dynamics of the instrument XAUXAG. The “triangle” price pattern break in August 2010 indicated the following strengthening of silver against gold. The chart illustrates how successful the signal was. Exactly at the same moment the traditional instrument XAGUSD finished its consolidation and extended an unrestrained rally, rising to a historical high close to $50 per ounce. It is also worth mentioning how efficient the 200-period moving average proved as a dynamic support/resistance level.

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