Why silver is lagging the price of gold
HalfDime
Posts: 192 ✭✭✭
Silver has been lagging behind gold in recent times, with gold setting new all-time highs while silver remains about 40% below its own all-time high. However, this situation is not unusual or problematic for silver. In fact, silver typically tends to outperform during the later stages of a gold bull market, rather than at the beginning.
There are several reasons for this lag:
Different market dynamics:
Investors and central banks are currently favoring gold over silver. Gold is often seen as a more stable asset during times of economic uncertainty. Silver, on the other hand, has more industrial applications, which makes its price more sensitive to economic fluctuations.
Historical patterns:
Historically, silver tends to underperform gold in the initial phase of a gold bull market and outperform gold in the later stages. This pattern has been observed in years like 2004, 2005, 2008, 2011, and 2020, which coincided with late stages of gold bull markets.
Market size and volatility:
The silver market is smaller than the gold market, which can lead to more pronounced price movements. As of early April, one ounce of gold could buy about 84 ounces of silver, compared to 2011 when it could only buy 30 ounces. This suggests that silver has potential for significant price appreciation relative to gold.
Economic factors:
Silver's industrial uses make it more vulnerable to economic slowdowns, particularly in countries like China. The potential for tighter central bank policies globally may also be holding back silver prices more than gold.
Investor positioning:
Recent gold rallies have been partly driven by large investors taking positions in out-of-the-money call options, possibly anticipating either significant interest rate cuts or increased geopolitical instability. This specific type of positioning hasn't been mirrored in the silver market to the same extent.
Despite the current lag, many analysts believe that silver has potential for future growth: The Silver Institute reports a major shortage of silver, with record demand in 2022. Demand is expected to increase further, particularly due to its use in solar panels. Some estimates suggest that underground silver reserves could be depleted by 2030 or 2035, highlighting the need for new exploration and potentially driving up prices. In conclusion, while silver is currently lagging behind gold, this is not uncommon in the early stages of a gold bull market. The fundamental factors supporting silver prices remain strong, and many experts anticipate that silver will eventually catch up to gold's performance as the bull market in precious metals matures.
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The ratio of gold to silver will have to come back. Gold is hitting nose-bleed levels in dollars and so silver must go up eventually.
Comments
Ones the metal of kings, the other is gutter metal. That's really all you need to know. RGDS!
The whole worlds off its rocker, buy Gold™.
BOOMIN!™
Silver runs up more and falls back more. Been that way since the 1960's and 1970's.
gold is the "panic" resource and is experiencing protection buying
silver is primarily an industrial resource and as such has its price set by major bullion banks
as available gold dries up look for panic buyers to turn to silver. this makes silver a good speculative buy at this time.
Repetition of ignorance is ignorance raised to the power two.
Silver isn't a hedge against inflation like Gold is.
Silver is also not a good investment like gold is. (IMO)
Don't expect the silver market to act like gold.
The substantial truth doctrine is an important defense in defamation law that allows individuals to avoid liability if the gist of their statement was true.
I compare the relationship between gold and silver like that of cryptos Bitcoin and Ethereum. One is the cheaper alternative to the other for those who want a cheaper piece of the action. The day will come when silver moves in tandem with gold. For this reason I see silver as a good buy at current prices. Note that silver does not rise significantly unless gold does so.
Silver price is currently at the mercy of major bullion banks who have repeatedly been charged by the Dept. of Justice (settlements reached in all cases) of manipulating prices. Same could be said of gold price fixing until recently worldwide central banks (but mysteriously not the US's Federal Reserve) have been on a rampage to stockpile gold, driving prices higher. This demonstrates to us that the true market for precious metals is able overcome bullion bank price controls and CAN use the laws of supply and demand to establish a constantly changing market equilibrium. Bullion banks trade an unlimited supply of paper promises for precious metals on the US COMEX and in London. There, there is no real price discovery that the true marketplace sets for prices of all things where supply and demand intersect each other to determine price equilibrium.
Repetition of ignorance is ignorance raised to the power two.
This is not entirely true, but allow me
Gold is the money of Kings
Silver the money of Gentlemen
Copper the money of Peasants
And
Debt the money of Slaves
Not sure where this came from , but round my parts gutters are made of aluminum , which until about 1889 and breakthroughs in purification processes, was considered a very rare metal round these same parts even more ‘spensive than the yella metal!
_ Aluminum is so ubiquitous today that it may not strike you today as a metal that would belong on the "precious metals" list or that even has much value. However, in the early and mid-1800s, it was considered in the United States and Europe to be very precious indeed. This led to the production of some rare pattern coins (trial pieces made to test out new designs or metal compositions) struck in aluminum. In fact, for a time during the 1800s, aluminum was more valuable than gold!_
_ the rare aluminum Amazonian pattern $20._
Aluminum, the Metal of the Gods…
I guess that’s why I liked catching the Mardi Gras Doubloons most when I was a kid… Poseidon, Aphrodite , even Zeus!
BTW Aluminum is the most abundant metal on the planet earth, at least in the crusty part we like to dig and play in.
Have a good day Ladies and Gentleman
Regards
-Luke
It's all about what the people want...
Silver never overcame the demise of Eastman Kodak. Copper is a good speculation now. CU took a hit on the AI DeepSeek news over last weekend. (AI with less electricity, less copper needed for infrastructure buildout.)