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Market Lab Report - Trader's Telegram: Will the Price of Silver Catch Up to the Price of Gold?

We have reported on both silver and gold stocks and ETFs that have done well in this environment which has favored alt-currencies. Silver's potential to catch up to gold's price is underestimated. When the precious metals trend higher, silver typically appreciates at a faster pace than gold. This happened a number of times such as in 2011 when precious metals soared, and also in 2020 after the Fed created trillions of dollars to deal with the economic impact of COVID where silver prices increased by nearly 50%, twice that of gold's 24.6% gain.

But keep in mind the precious metals have had a great run this year so one must be opportunistic and patient to wait for the next actionable entry point which make take time as one should never buy extended. That said, today's report on a gold stock is actionable. Recent CPI and PPI reports showing inflation is slowing suggest the Fed will be able to pivot sooner than later which weakens the dollar. This is bullish for precious metals. In fact, the correlation between the dollar and gold has been higher than normal since 2022 as the Fed switched from easy money to aggressive rate hikes suggesting precious metals still have room to run.

As for whether silver stocks and ETFs are potentially more profitable than the gold equivalents:

1. Historical Gold-Silver Ratio
The gold-silver ratio has been historically much lower than the current 80:1 ratio. This significant difference suggests that silver is undervalued compared to gold.

2. Increasing Industrial Demand for Silver
Silver has a wide range of industrial applications, including electronics, solar panels, and medical devices. As these industries continue to grow, the demand for silver will also increase. Don't overlook the impact of industrial demand on silver prices.

3. Safe Haven Appeal
Both gold and silver are considered safe haven investments during economic uncertainty. As global economies face challenges, governments, institutions, and investors have been buying precious metals as the alt-currency lifeboat trade.

So the disparity between gold and silver prices, growing industrial demand, and safe haven appeal suggest that silver may outperform gold as the gold:silver ratio continues to fall.
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This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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