That’s part of a headline from Friday’s Journal on page B-10. The following are direct quotes from that piece, and I cannot disagree, or quarrel with any of it.
“Gold has once again proven its nettle as a hedge against financial chaos, but it could soon also be outshined by that other, but less-adored precious metal.
“Gold did better than the S&P 500 in the 1970s and the first decade of this century, it protected investors from inflation in the first case and from a more-general malaise from dot-com bust to financial crisis in the second. It could be set to repeat the feat again. So far this decade, gold has returned 116% compared with 81% for the S&P 500 including dividends, according to Fact Set. Never the less, gold is up around 43% over the past 12 months, while silver has risen around 23% over the past year.
“Silver has a split personality. As a precious metal, it carries much of the haven appeal of gold, promising to retain value amid inflation, war, societal strife, and the like. Silver also has more industrial uses than gold, such as electronics and solar panels, making it more economically sensitive. So when markets start fearing a downturn, gold often outshines silver, at least initially.
“Hard-asset aficionados like to keep an eye on the ratio of gold to silver prices, to gauge when the yellow metal is getting overheated. As of Wednesday, gold cost 98 times as much as silver per ounce, down from 105 earlier this week. The average over the past 30 years has been 68. The only other time in that period was, when the balance was so out of whack, was amid the initial Covid panic in March 2020, when it reached 113. In the 12 months following that episode, silver prices rose 73% while gold climbed just 8%.
“During the financial crisis, the gold-silver ratio never breached 100. It did rise sharply from 53 in June 2002 to 80 in November. This, too, heralded a strong run for silver. It rose 81% over the subsequent 12 months versus a 44% gain for gold. During a less-remembered market panic in early 2016 the ratio also topped 80. Once again, this led to subsequent out performances for silver.
“What could break the pattern this time? A truly ruinous global trade situation might do the trick, thanks to silver’s economically sensitive side. To hedge against a worst-case scenario, gold still outshines silver. For anything less, history suggests it may be time for investors to introduce a new precious-metal friend to their portfolio, even while keeping the gold.”
The article never mentions the fact that silver and gold can be purchased from Colorado Gold for 1% over our absolute wholesale cost, including delivery to your door, nor does it mention that we don’t advertise, deal in numismatics, have expensive offices or maintain a retail store, which all cost money and add to anyone’s prices, except ours. And never to be ignored or forgotten, is the fact that when a currency collapses, as has the dollar over the last few decades, silver is a must for bartering. Gold is too expensive for bartering.
Don Stott, don@coloradogold.com