Silver and Oil: Two Sides of a Coin

By Brad Zigler

Yesterday, trading screens flashed big red numbers for both oil and silver.

NYMEX crude oil was off nearly 5% as traders speculated on an upcoming International Energy Agency report that's likely to slash demand forecasts. Insiders are talking up a halving of demand growth from previous estimates of 700,000 barrels per day.

December NYMEX crude fell amid fresh selling after clearing traders' decks of small buy orders and has worked itself lower throughout the trading day. Traders probed beneath the psychologically important $60 level. Meanwhile, overhanging resistance at $67.50 looms.

NYMEX Crude Oil (December 2008)

Silver moved sympathetically lower in morning trading as well, after being marked down 37 cents to $9.94 in London. COMEX December silver was off 50 cents - nearly 5% - in midday trading.

Silver's been playing catch-up with gold lately. Silver buyers nibble, it seems, as gold buyers gobble. The silver/oil ratio has stair-stepped higher while the gold/oil ratio's stagnated.

Precious Metals Ratios