When Will Silver Shine?

Why is silver still trudging along while gold continues to rise toward a forecasted peak of $3,000? It’s a fair question, and one I field daily.

Though silver’s performance thus far might be disappointing to some silver investors, it is unsurprising to the experts. Historically, silver’s performance has been lackluster at the onset of many significant market dips and recessions. Almost all of the S&P 500’s biggest declines since the 1970s saw silver dip, sometimes more than stocks, while gold rose.

Silver’s current state is no exception to this historical pattern. The S&P 500 is down 12% and, of course, gold is on the rise. But silver? Down 15%.

Unsurprising, yes. But unattractive? No. Silver may follow a different path than gold in times like these, but its path is still promising – perhaps even more so than gold.

While, like gold, silver acts inversely to the market, it also answers to another major influence: industrial demand. Unlike gold, the vast majority of the silver supply goes to non-monetary uses like solar technology and silverware – products whose demand would be affected by a dip in the market, in turn affecting the demand for silver. This accounts for silver’s initial lag in economic downturns, but it also plays into silver’s upside when the metal begins to climb.

Silver usually rallies six to 12 months after gold and, historically, it has outperformed gold in most bull markets since the 1970s. Additionally, the silver-to-gold ratio currently sits at 114:1 when historically the metals maintain a ratio closer to 30:1. Coupling these conditions alerts us that the pressure is building on silver to follow and potentially surpass gold.

Experts name a number of factors that could finally trigger silver’s move but the reality is that it can’t be determined with certainty. However, it is certain that the six-to-12-month timer has already begun and the window to capitalize on silver’s clear path ahead is rapidly narrowing.

Call us today to position your client in silver. With its proven performance as “wealth insurance” and its apparent impending upside, there may not be a better time to purchase.