Net positioning in silver is also incredibly bullish.
Gold prices are also putting in a solid performance after they gained a further 2% after the initial Brexit rally, but silver continues to dramatically outperform gold.
Silver’s outperformance of gold has been evident all year, with silver’s year-to-date return almost double that of gold. This may partly be down to silver’s greater exposure to the industrial sector. In the wake of Brexit, expectations for looser monetary policy globally have driven a lot of flows, but we have also seen a rise in fiscal stimulus expectations as central banks increasingly look tapped out.
This rise in fiscal stimulus expectations in the wake of Brexit seems to have rallied a range of industrial metals, but especially silver. This industrial sector exposure has helped drive the gold-to-silver ratio down to its lowest level since August 2014. And if history is any guide, such moves in the ratio usually continue until the long-term average of the ratio of 60 is hit.