Gold Leaves Silver In The Dust

GOLD LEAVES SILVER BEHIND

Complicated and convoluted technical analysis, inflamed fundamentals, never-ending last chance warnings and all the supposed evidence to the contrary – there is nothing that justifies the ultra-bullishness of silver stackers and investors. We might say “gold leaves silver behind, waiting, and in the dust.

Below is a chart of silver prices since August 2020 when both metals peaked…

Silver Prices Since 2020

Now, here is a chart of gold prices covering that same period…

Gold Prices Since 2020

Here are the facts: since both metals peaked in the summer of 2020, the gold price is unchanged ($1971 vs $1977); whereas, the silver price is lower by almost $5 oz., or seventeen percent.

GOLD LEAVES SILVER WAITING 

Below are two more charts…

Silver Prices Since 2011Gold Prices Since 2011

In the past twelve years, since the 2011 peak, gold has increased by a mere total of eight percent, slightly positive on a nominal basis. That is hardly consequential in its own right, but when compared to silver, the numbers are quite startling. Silver has sunk in price by fifty-one percent ($48.60 vs $23.80) over the same time frame.

NO SILVER STREAK 

Here are two more charts that reinforce the lack of followthrough on silver’s part relative to gold..

Silver Prices Since 1980

Gold Prices Since 1980

Since it peaked in 1980 at $677 oz. (monthly average closing price), gold has tripled in price. Over that same 43-year period, the price of silver has dropped from its 1980 peak of $36 oz. (monthly average closing price) to its current price of $23.84 oz.

The ugly truth is that silver is lower by thirty-four percent since its 1980 peak, while gold has increased by one hundred ninety-one percent.

FOR SILVER, WORST IS YET TO COME 

There have been occasions when silver outperforms gold. But those occasions follow previous descents into the fires of hell for silver.  In those instances, any possible relationship between the two estranged metals has been worn extremely thin.

For example, after the two metals peaked in 1980, the gold price ultimately bottomed at $250 oz., a drop of seventy percent its intraday high of $850 oz. Silver, on the other hand, fell by ninety-three percent from its intraday high of $49.45 oz to a low of $3.60.

From those respective points, gold rose more than seven-fold to a new high of nearly $1900 oz., which was more than double its previous peak of $850 oz. Silver, bettered gold’s move by almost double, increasing more than thirteen-fold from $3.60 to $48.70.

Nice enough, except that silver’s peak at $48.70 in 2011 barely matched its 1980 peak from more than thirty years before.

Sure; it would have been more profitable to hold silver from its low to its high compared to gold. And then, what? You would have sold, of course. Otherwise, all those relative gains would have been lost as silver proceeded to drop by seventy-two percent.

Gold dropped  by forty-five percent but it still found a resting place well above its 1980 peak; and has gone on to new highs since then. Silver, however, is still mired in soggy bottomland at a level fifty percent lower than its 1980 peak.

As time goes by, the gap between gold and silver widens. Which means that gold moves progressively higher over time and drops less in price than silver. Over time, silver moves back and forth over the same ground without moving higher; and always falls farther and faster than gold.

ADVICE FOR STACKERS, INVESTORS, AND TRADERS

Sone of us in this industry actually bought silver bullion and silver coins in 1970. And made money doing it. Some of us understand fundamentals, too. (See Gold And Silver – Fundamentals Be Damned)

Having some silver coins on hand for emergency purposes is reasonable and recommended. At this point in time, however, if you need to buy silver coins, try Kennedy clad half dollars (forty percent silver). Or, buy fractional gold coins.

Either of the two is an overwhelmingly better choice than Silver Eagles and junk U.S. silver coins. You are kidding yourself if you think 70-90% premiums are justified.

Silver, itself, is a lousy investment. See the charts above. Also, remember, that the charts and information in this article reference nominal prices. On an inflation-adjusted basis, the numbers go from bad to pathetic.

If you are a trader in silver, there are times when you can pick off a few dollars per ounce quickly. Don’t overstay your welcome, though.

All things considered, gold is a better choice than silver. (also see Silver – Dead In the Water For Forty Years)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

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