Why an ounce of gold bought more silver during Friday’s selloff

Two prices, one moment

At 18:13 UTC on 30 October, Reuters put spot gold at $3,880.97 per troy ounce and silver at $49.00. The reported declines were 3.5% and 6.5% respectively. Dividing the quoted prices gives about 79.2 ounces of silver per ounce of gold. These are Friday intraday marks. Sunday’s publication date adds no new price observation.

Imagine holding an ounce of either metal from the previous reference point. Both positions were worth fewer dollars at the observation. The gold holder nevertheless had more purchasing power in terms of silver. Expressing a metal’s value in the other metal changes the unit of account. The same position can therefore show a loss on one statement and a gain on another.

Source notes: [1] Reuters — Friday precious-metals market report

How large was the relative move?

Taking the rounded percentage changes at face value, a dollar of gold exposure became $0.965 and a dollar of silver exposure became $0.935. Divide 0.965 by 0.935 and subtract one. The ratio rose approximately 3.2%. Simply subtracting the two reported declines gives three percentage points, the gap between their dollar returns. That is a different calculation.

There are two limits to the precision of this reconstruction. Reuters published rounded changes, and the silver quote is given to fewer significant figures than gold. A historical database might return a slightly different ratio if it uses a different observation minute, provider, quote side or daily baseline. I would store 79.2 as an approximate snapshot and leave the prior ratio blank unless both original reference prices are available.

Source notes: [1] Reuters — Friday precious-metals market report

London’s two benchmarks run on different clocks

A London valuation can be perfectly consistent and still answer a different question. LBMA lists the start of the afternoon gold auction at 15:00 London time and silver at noon. A daily ratio based on those benchmarks spans three hours between the scheduled auction starts. On a volatile afternoon, some of the difference from the Reuters figure can come from time alone.

For valuation against a mandate, I would retain the prescribed auctions and label each leg. For an intraday study of the relative move, I would use two observations from the same provider and minute. If one leg is unavailable, carrying forward the older price can manufacture a jump at the next update. Flagging that interval as missing preserves the meaning of the remaining comparisons.

Source notes: [2] London Bullion Market Association — Daily auction prices

What would make the divergence worth following?

My first question next session is whether silver continues to lag on matched observations. If gold holds steady and silver recovers, the ratio could narrow without any selloff in gold. If both rebound but silver rises faster, the ratio can narrow even as a gold holder earns a positive dollar return. Those paths have different implications for someone monitoring outright exposure.

A ratio alone cannot establish forced selling, industrial demand or physical scarcity. An attribution to industrial demand would need dated evidence about consumption or orders. A liquidity explanation would need contemporaneous spreads or market depth. Friday’s prices establish relative performance. They leave the identity and motives of the marginal seller open.