Silver is Going Mainstream
Mainstream media is picking up on the hype around rising metal prices. He is correct about precious metals miners being volatile with a poor track record. Subscribe to the Golden Portfolio 10X and learn more about the most profitable best silver miners with the highest grade and most profitable mines in the world. GPX includes two silver companies that own over 300 million ounces in rare pure silver assets. These pure silver companies will be the best way to play higher silver prices.
Best,
Garrett
John Stepek at Bloomberg talks about silver and why you should invest in it.
I want to take a look at something a bit different this morning. Silver.
Silver is an intriguing metal. Like gold, it’s a precious metal often used in jewelery. But unlike gold, it has a vast array of industrial uses, from solar panels to computing to health. That means its price is influenced by economic growth prospects. A booming, or recovering, economy will generally be good for silver.
More interestingly still, more silver is being used each year than is being dug out of the ground, according to a recent note by Michael Hsueh at Deutsche Bank. In other words, it’s running at a supply deficit. That sounds quite exciting — more demand than supply.
But there’s a catch. As Hsueh notes, there’s still a “vast stock of silver above ground” in the form of scrap silver that could easily make its way to market at the right price. As a result, physical supply and demand is not an issue in the way that it can be for, say, oil.
Big yawn at silver then? Not quite. You see, in common with gold, yet unlike any other precious metal (eg platinum and palladium), silver used to play a role — albeit a junior one — in the monetary system. As a result, it’s not just the economic cycle that matters, but also the monetary backdrop.
Put more simply, silver tends to follow what gold is doing. And based on the gold/silver ratio, silver is currently on the cheap side by that measure, notes Charlie Morris over at ByteTree. Today, as the chart below shows, one ounce of gold will buy you roughly 88 ounces of silver. The 30-year average is more like 67.
The ratio can, of course, correct in more than one way. Both the gold and silver prices could fall — the ratio could still drop as long as the gold price falls faster than that of silver. Hsueh at Deutsche Bank reckons that both prices overall are likely to range trade in the coming months, rather than move strongly in either direction.
But assuming you think gold’s bull market can be sustained in the longer run (as my colleague Marcus does) — and particularly if you think that there’s a chance that the global manufacturing cycle might be about to turn higher — there’s a case for arguing that silver may have further to go.
So how should you think about silver from an investment point of view?
How to Invest in Silver
For me, the key difference between gold and silver boils down to this: gold is basically always worth having in your portfolio as a form of disaster insurance. Loosely speaking, while gold is volatile, it tends to behave differently to any other asset class. So it has a role as a core (if small) diversifier in your overall asset allocation.
https://www.bloomberg.com/news/newsletters/2024-03-25/the-case-for-investing-in-silver-over-gold
