When Gold Walks Silver Runs

Introduction

In our quest to help our clients make informed investment decisions, we’ve recently been fielding a common question: why invest in silver when gold has historically proven to be a solid performer? It’s an excellent query, deserving of an in-depth response. Today, we delve into why silver, given the right circumstances, could be an advantageous addition to your investment portfolio.

The Gold-to-Silver Ratio: An Opportunity in Disguise

A significant factor to note is the gold-to-silver ratio. Historically, this ratio has been 15:1. That means, for every ounce of gold, 15 ounces of silver were equivalent in value. However, this ratio has currently ballooned to 80:1, suggesting that when gold performs well, silver could potentially do even better.

Supply Ratios: Potential for Silver to Bounce Back

The supply ratio between the two precious metals further emphasizes this point. Approximately 19.3 ounces of silver are available in the ground for every ounce of gold. Despite this, recent fluctuations saw the gold-to-silver ratio rise to 110:1. While this ratio has occasionally swung to the other extreme (for example, during the Roman Empire, when the ratio was fixed at 1:10), such discrepancies only underscore the potential for silver to bounce back.

Buying Silver at a Discount

Given these facts, buying silver now means buying it at an approximately 80% discount compared to gold, relative to the historical 15:1 ratio. Consider it this way: an investment opportunity at an 80% markdown is usually snapped up instantly. The only difference here is that the hype surrounding silver isn’t as prevalent as with other assets. This relative obscurity could prove to be a blessing, allowing early investors to capitalize on potential profits before the market crowds.

The Historical Performance: Gold vs Silver

To illustrate this point, let’s look back at periods when both gold and silver appreciated substantially. In August 1976, gold prices started at $103 and surged to $825 by January 1980—an impressive 800% increase. The average annual percentage increase during this period was about 85.48%. Comparatively, when we analyze silver during the same period, we notice even more astonishing numbers. Silver prices, starting from $4 in August 1976, skyrocketed to $48 by January 1980, equating to a 1,188% increase and an annual average increase of 91%.

Fast forward to November 2001, gold prices began at $270 and appreciated to $1895 by September 2011, marking a 705% increase, with a 26% average annual increase. Silver during this period? A spectacular ascent from $4 to $49, signifying a 1,230% increase and a 29% annual growth rate.

Current Prices and Future Projections

With current gold and silver prices standing at $1960 and $24 respectively, if silver investments can yield returns even remotely similar to those in the past, investors will be looking at a highly successful strategy with minimal risk.

Mastering the Timing: Our Unique Selling Approach

Of course, the question of timing is paramount. When should one buy and sell? At Gold Silver Mart Corp., we’ve spent years developing a model, based on a century’s worth of data, to guide us in making these critical decisions. When you invest with us, you will be among the first to be informed of our sell and buy signals.

Our Recommendations for Your Precious Metals Portfolio

While we typically recommend a substantial portion of your investment to be in gold when a buy signal is triggered, we believe those with smaller portfolios or those seeking to maximize their potential upside might find a silver-dominant strategy more lucrative.

Conclusion: Silver’s Potent Potential

So why choose silver over gold? When timed correctly, silver’s potential to outperform gold could lead to significant gains, making it an attractive option for those aiming to diversify their portfolios or to maximize their investment returns.