Is Silver A Better Investment Than Gold Right Now?

Friday, April 15, 2016

silver barsAnyone who’s read the news lately knows that despite day-to-day fluctuations, there appears to be a solid market for gold right now. The precious metal is more than just an investment; it’s a hedge against inflation, against a poorly-performing stock market, and a safe place to put money when the banks start charging interest to hold it for you - should that day ever come to the U.S.

But What About Silver?

Silver is currently just over $16, which is a high in recent terms. But if you zoom out and look at silver from a broader perspective, you might find that silver is one of the best potential investments out there right now.

The Historic Ratio Of Gold To Silver

The first thing to understand about silver and gold is that these commodities - and, through history, moneys - have a long tradition of stability. And that means stability relative to each other as well. The price of gold to silver is typically under 20 to 1, though in recent years this has fallen off. Gold has accelerated to quadruple digits; silver’s remained under $20 for most of that time.

As it currently stands, the price ratio of gold to silver is about 76:1.

That’s over six times as high. If you don’t believe that gold is going to go anytime soon, then maybe you should ask yourself if you believe that silver is going to go up. With the historic average somewhere less than 20-to-1, going back before 1900 and the erasing of the gold standard in the 20th century, there may be some cause to believe that silver is tremendously undervalued right now. That means it may be the best available investment in precious metals right now - more valuable than even gold.

Recent Developments In Silver Investing

Recently Bloomberg noted the marked upswing in silver prices, writing “Silver is finally catching up to the gold rally.” They also produced a chart tracking ETPs backing silver. You can see the results for yourself.

If precious metals are moving, you can expect silver to come along for the ride. Silver has a lot of vertical space to make up if this is going to be a bull market for precious metals, and silver isn’t even near its all-time high yet. The strong dollar (silver is priced in dollars, as is gold) has kept silver prices relatively stable as of late, but if you’re waiting for the sign that says it’s time to get into silver, don’t expect it to arrive. It might have already come.

Of course, an uptick in silver prices does not a bull market make. Compounded with yesterday’s news about a potential gold bull market in 2016, however, you might find silver to be an even more enticing possibility than gold. If anything, the historic ratio of gold to silver shows just how undervalued the precious metal is when compared to a long history of buying and selling. Is it right for your portfolio? Only time will tell. 

Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.