Silver has been considered money as long as gold but has lagged gold badly of late. Perhaps this is because silver is not a Central Bank Reserve. But it is a precious metal with a functional deficit between supply and demand and remarkably varied industrial uses.
Perhaps its lackadaisical performance is because we have not seen conventional price inflation. But silver responded well to the monetary machinations during the 1970s and in the multiple crisis after 2000-2008 financial crisis. We see no reason why it should not do so again.
Starting after 9/11 silver ran from a low of near $4 to about $21. After the crash of 2008, it rose from around $8.40 to just shy of $50. Notice these were big percentage moves, showing that when silver gets rolling, it can really move. Like gold, it went into a bear market after 2011, but unlike gold, it never really recovered nor entered into a new bull market…until recently.
Silver has just had its biggest monthly gain in 9 years; up 20.7% to $18.50.
The ratio between the two metals which was in the high end of the historic zone of around 80:1 stretched all the way recently to 131:1 exceeding anything we have ever seen. Now the ratio seems to be turning in favor of silver.
If you caught the recent Senate testimony of FED Chairman Powell, he came close to begging Congress to spend more money, so he can print more to buy their debt.
This is not being lost on precious metals investors.
If you have been a bit late coming to the game, silver seems priced uncommonly cheap relative to gold and it now is gaining technical strength on its own merits.
Neland D. Nobel, is a retired portfolio manager and Certified Financial Planner with 45 years of market experience in the securities and gold industry.