By Ryk de Klerk
CAPE TOWN – Although gold and silver historically are positively correlated, the characteristics of the two metals have changed significantly over the past 15 years or so.
There are two main distinctions between gold and silver. Due to gold’s defensive behaviour the metal outperforms equities during any crisis, whether it be geopolitical, financial or global pandemic.
This is also the reason why the ratio of the gold price and emerging market equities with the MSCI Emerging Market in terms of US dollars as proxy is highly correlated with the CBOE VIX (volatility index of the S&P 500 Index).
Investment demand and specifically speculative demand via Exchange Traded Funds (ETFs) drives the gold price higher while equity prices sink.