Silver's Outperformance Of Gold
With everyone focusing exclusively on gold these days, what has received little media attention is that over the past year, silver has actually outperformed gold substantially, and on a relative basis the comparable outperformance has been material. The chart below is a simple relationship between the spot price of gold and silver. As the declining line demonstrates, while the Gold/Silver price ratio at the end of 2008 was 84, it has now dropped to to just under 62. For the Fibonacci fans, that represents a 0.50 retracement. With Gold popping, will silver continue its price acceleration as it attempts to hit the lower trendline, which crosses at about 52, and implies a silver price of $22/ounce?
(2 votes)
on Tue, 11/17/2009 - 11:06
#133208
*Grabbing Slide Ruler*
on Tue, 11/17/2009 - 11:11
#133213
take a look at palladium and platinum too
on a ratio basis with silver and gold.
on Tue, 11/17/2009 - 11:20
#133225
My problem with palladium and platinum is that if someone handed me a piece of each, I wouldn't know which is what. I'd just call it Silver and trade him as such.
Silver is a much better SHTF barter instrument, but also look at what rhodium is doing. When I looked up rhodium a few weeks ago to find out what it was and why I should buy some, there was an $1800 ask on an ounce. I still don't want any.
on Tue, 11/17/2009 - 11:41
#133262
Yeah, well that's a 500% decline from where it was a couple years ago (~$10,000/ozt).
I am Chumbawamba.
on Tue, 11/17/2009 - 12:08
#133302
you mean 80% decline.
on Tue, 11/17/2009 - 13:06
#133361
Whatever.
I am Chumbawamba.
on Tue, 11/17/2009 - 15:06
#133507
Lol.
on Tue, 11/17/2009 - 15:30
#133544
"DUMB BITCHES".
LOL
I am not chumpawamba.
on Tue, 11/17/2009 - 15:43
#133568
Yea, lol.
on Tue, 11/17/2009 - 12:17
#133307
To me palladium and platinum are just rare commodities, whereas gold and silver have monetary value. In a SHTF scenario I think gold will be the best thing to own, while silver may be useful for barter after you run out of fiat money (if fiat is still accepted).
on Tue, 11/17/2009 - 13:40
#133401
Gold should only be exchanged for quantities of Silver to be used for purchases of small value. The SHTF scenario is not too far away, and as much as I disagree will some of KD's totalitarianism on his forum, I admire his spirit:
http://market-ticker.denninger.net/archives/1632-Open-Letter-To-The-Chin...
This is going to end badly.
Got "palladium"?
on Tue, 11/17/2009 - 21:23
#133982
Yep, I've been loving the rise in Palladium.
Bought 50 ounces over the span of last 5 months, my last bit was bought a couple weeks ago just before this latest runup in the price.
Total average cost is just under 300 an ounce.
The new Palladium ETF set to be launched in the US is probably part of the reason why the value has gone up so much, they gotta buy some to hold in the vaults to back up the ETF.
After that ETF is launched, who knows what'll happen to the price then.
on Tue, 11/17/2009 - 22:58
#134059
William, tell us, during your vast travels throughout the future, which precious metal will persevere as the final store of value?
Oh yeah, and will LeBron be headed for New York in 2010?
on Tue, 11/17/2009 - 11:11
#133214
Silver's not taking the day off.
I fully expected him to drop below $17 after that pop with Gold down the next day.
on Tue, 11/17/2009 - 11:22
#133230
Silver, gold, oil, copper, it doesn't make a lot of difference IMHO, just don't hold your wealth in USD (backed more and more everyday by Fannie and Freddie MBS).
on Tue, 11/17/2009 - 11:31
#133234
Stop it Ghost! You're scarin' me, and you know how jumpy I get...
OOOOhhhhmmmmm
If I don't see IT, IT can't see me!
OOOOhhhhmmmmm
on Tue, 11/17/2009 - 12:37
#133328
well you have seen the investments triangle. they have posted it on this blog more than once. and what is at the point of the speer? PM....
on Tue, 11/17/2009 - 13:13
#133371
Actually I was making an allusion to the populace consensus of, not only wall st. and the fed, but also main st. and the gov't; and that is as long as we pretend everything is fine, everything is fine, facts be damned.
http://www.youtube.com/watch?v=E5VUd7NCtjY
on Tue, 11/17/2009 - 13:38
#133398
Some days I feel like me 'n Mackie have more in common than some might think...
http://www.youtube.com/watch?v=j6IGldTYr7g
on Tue, 11/17/2009 - 11:45
#133270
copper inventories at 5 year highs
yet copper prices surging
thanks Ben for the liquidity. Nonsense.
on Tue, 11/17/2009 - 13:08
#133365
Liquidity is piling into hard assets. Copper is real money. Not saying it's not a bubble, but with all the financial "engineering" going on these days, don't use past historical trends to guide you forward. The old maps do not recognize the new landscape that is materializing from global financial upheavel.
I am Chumbawamba.
on Tue, 11/17/2009 - 11:26
#133238
in the book the wizard of oz, dorothy took her journey down the yellow brick road in silver shoes.
paper may smother rocks, but silver scissors cut paper...
on Tue, 11/17/2009 - 11:26
#133239
i got out of silver yesterday, because due to its industrial demand i fear that it will follow equities down when a correction comes. i also believe that correction may be imminent, perhaps after the pop up to 1115-20 that nic alludes to in his earlier post.
when shit hits the fan though next year i believe all bets are off in the correlation between price of silver and industrial demand. then it become more purely a store of value.
on Tue, 11/17/2009 - 11:43
#133266
Physical silver or some shitty ETF? Selling physical silver now could be a mortal mistake. If you're going to get physical do it now. Nothing will be available in a few years.
There will be no correction with silver. If there is it'll be shallow and short lived.
I am Chumbawamba.
on Tue, 11/17/2009 - 11:59
#133294
just a shitty etf, chumbawamba. haha. ill keep playing the paper though, at my own risk. unless i can look like slick rick in the process, now that would be some shit
maybe shallow. maybe 10%
on Tue, 11/17/2009 - 12:07
#133300
Playing "the paper" will work great until the day that it doesn't work at all.
I, personally, would rather be a few months or even years early, than that one day too late.
on Tue, 11/17/2009 - 11:27
#133240
http://www.scribd.com/doc/22658948/GLD-SLV-ratio
I've used the ETFs for this.
on Tue, 11/17/2009 - 11:28
#133242
Is there a Silver equivalent to GLD ??
on Tue, 11/17/2009 - 11:30
#133245
i like dbs
on Tue, 11/17/2009 - 11:40
#133258
SLV, or double silver's AGQ
on Tue, 11/17/2009 - 11:43
#133267
SLV is the equivalent
on Tue, 11/17/2009 - 12:19
#133310
FYI (in case you don't know): the custodial bank for SLV is none other the house of morgan-rockafella. JPMoRock is rumored to be neck deep net short in silver @ the COMEX.
how convenient.
some project mayhem research on SLV from the archives:
http://www.zerohedge.com/sites/default/files/SilverETFs_1_PDF.pdf
worthwhile to read before you continue to feed the beast.
on Tue, 11/17/2009 - 13:33
#133395
And if you think SLV is bad, just wait until you read GLD's 10-k filing. You can forget about actual good delivery bars, any insurance or even proper regular independent audits of the gold claimed to be held by HSBC and others. GLD has HUGE counterparty risk!
READ GLD's 10-K FOLKS, especially pages 54 to 58 or thereabouts.
If you do not hold it, you DO NOT own it. Pure and simple as that, buy physical gold and.or silver and hold it.
on Tue, 11/17/2009 - 11:45
#133271
Yes, it's call SHT (as in SHIT).
Buy physical. It has a nice ring to it.
I am Chumbawamba.
on Tue, 11/17/2009 - 11:47
#133276
SLV
on Tue, 11/17/2009 - 11:42
#133263
George Soros top 10 holdings as of Sept 30 if you are into that sort of thing
SPRD GLD #4
http://is.gd/4Xc7T
Ford (F) a new addition (not in top 10)
on Tue, 11/17/2009 - 12:53
#133341
good of ol' georgie to take one for the team. wonder if he or Paulson/Greenspan are 1st in line to grab the stash if/when the paper hits the fan?
on Tue, 11/17/2009 - 11:43
#133265
Yep I have been doing more silver than gold
silver huge yesterday but gold has been better then past 4-5 weeks.
on Tue, 11/17/2009 - 11:45
#133273
SILVER BITCHES!!!
I am Chumbawamba.
on Tue, 11/17/2009 - 11:53
#133282
Yeah, Silver is "outperforming" Gold over the past year.
That's because it COMPLETELY COLLAPSED from $21/oz to $9/oz between March and November 2008. It hasn't even gotten close to re-capturing its March 2008 level.
If you were a buyer in early 2008 you are still underwater nearly two years on and will likely remain so for quite a while longer.
I'll stick with my Gold, thank you very much.
on Tue, 11/17/2009 - 11:59
#133293
Gold is for wealth storage, silver for barter and trading.
on Tue, 11/17/2009 - 12:29
#133320
You could make the same argument against Pt and Pd that still haven't made their highs back from last year. Industrial metals are going to be effected by industrial demand. It is somewhat and apples to oranges argument.
Mean reversion of the gold/silver ratio to the 20th century average of 47 to 1 has silver out performing until we get back to the average.
I keep my pm's diversified and if I need a barter currency that is what my homebrew operation is for.
on Tue, 11/17/2009 - 13:11
#133369
Yeah, it's not even CLOSE at only $3 under it's historic high with only a 25% rise in the past 6 months. Silver will likely break it's old high before the year is up.
I am Chumbawamba.
on Tue, 11/17/2009 - 12:02
#133295
SILVER is not the KING for nothing. Hold onto your hats ladies and gentlemen. Silver finally cleared some major resistance associated with the steep drop from $21 to $8. Watch now how THE KING recaptures his crown.
on Tue, 11/17/2009 - 12:03
#133296
YARR!
on Tue, 11/17/2009 - 12:06
#133299
If you have the stomach for volatility, play the Canadian junior mining stocks for silver and gold, such as Fortuna(FVI), Romarco (R), and Endeavour (EDR) on the Toronto exchange. There are a million others, but these are three that I'm comfortable investing in.
Nice site, BTW.
on Tue, 11/17/2009 - 12:35
#133325
95% of the silver ever mined has been used up. theres 21 times more gold than silver. the market is tiny. a very small demand increase, will consume total supply in about a heartbeat.SILVER BITCHES INDEED !!!
on Tue, 11/17/2009 - 12:37
#133327
Not for the faint of heart or weak stomach. Silver is volatile and that is putting it mildly. When gold takes off silver will run faster, when gold drops silver will dive.
But ... IMHO silver will be where the big $$$ is made. Why? Because for many people gold will be too expensive. People will want gold but wont be able to afford it... and that will be silvers shining moment when the unwashed masses turn to gold's poorer cousin. Silver will be a later bloomer but blow off dramatically.
on Tue, 11/17/2009 - 12:57
#133350
I think what you meant to say was:
"silver will be where the big $$$ is made by those who couldn't/wouldn't own gold."
Gold is where the REALLY BIG money is being made and will be made in the future
on Tue, 11/17/2009 - 13:07
#133362
Best % returns will be made in silver.
on Tue, 11/17/2009 - 13:13
#133372
Agreed.
SILVER BITCHES!
I am Chumbawamba.
on Tue, 11/17/2009 - 14:32
#133458
Nope. Silver will be where the BIG money is made.
Let me give you an example in back of the napkin numbers. If you owned $1000 of gold this year your investment has gone up roughly 27%, whereas that same $1000 investment in silver has gone up over 60%.
As the price of gold far outreaches the average person trying to protect their wealth they will naturally turn to silver. The big knock on silver for years that it was too cheap. People will realize that in this small market they can establish a considerable position to protect themselves and silver will shoot out of the galaxy. Gold will go to the moon but silver is where the BIG bucks will be made.
on Tue, 11/17/2009 - 12:44
#133333
Metaphorically speaking, I'd never own physical gold and silver without owning a little physical lead too, if you know what I mean. Lead, the ultimate hedge.
on Tue, 11/17/2009 - 13:10
#133367
Don't forget arsenic. Arsenic is a great hedge when everything else you own is gold and silver. Again, metaphorically speaking, of course.
on Tue, 11/17/2009 - 13:26
#133383
And witch hazel, for when sarcasm makes your arse bleed.
on Tue, 11/17/2009 - 12:56
#133347
Silver will hit $50 in the not-too-distant future. Everyone should own some physical silver.
It's very easy to purchase and have it delivered.
on Tue, 11/17/2009 - 13:08
#133364
Sure. Max out your credit cards and buy all you can. Once you take delivery bury it somewhere and declare bankruptcy.
Who gives a crap? Everybody else is cashing out. Why should anyone martyr themselves?
on Tue, 11/17/2009 - 13:30
#133391
SilverIsKing, Can you provide a referral for an online source to purchase. I have had recent problems with Kitco. Thanks.
on Tue, 11/17/2009 - 14:44
#133471
Northwest Territorial Mint & Goldline
Both of these I have purchased from. NWTM seems to take their sweet time delivering though. But I always like my silver purchase to be in the black before I take delivery. :o)
However I have been waiting for a dip to buy more from a new source I found even better price than NWTM .... Westminster Mint. Another place would be Monex.
Disclaimer: I have not purchased from Westminster or Monex.
on Tue, 11/17/2009 - 14:53
#133483
The best I've dealt with is Tulving. Low premiums and quick turnaround.
http://www.tulving.com
on Tue, 11/17/2009 - 21:35
#133986
APMEX has yet to let me down.
It's where I buy all my PMs.
www.apmex.com
on Tue, 11/17/2009 - 14:32
#133457
Silver king,
Let me know where to buy and sell physical silver and gold.
on Tue, 11/17/2009 - 12:59
#133353
I believe the quote is:
Gold is for Kings,
Silver is for Gentlemen,
and Debt is for the enslaved.
At least, that is the quote that I read yesterday.
Cheers.
on Tue, 11/17/2009 - 13:49
#133416
Bron Sucheki's response to Project Mayhem's research is worth the read.
http://seekingalpha.com/instablog/217411-bron-suchecki/19879-multiple-an...
The GLD and SLV anomalies may be a bit overblown. One should definitely hold some physical, but the ETFs are quick, easy and liquid in my view.
on Tue, 11/17/2009 - 14:54
#133485
agreed...always good to look at both sides of the argument before scratching the noggin
on Tue, 11/17/2009 - 14:27
#133452
question...i realize the $30-40 silver call could very possibly play out. maybe higher eventually. but i'm not very familiar with the physical market. with eagles at $25 each and rolls for $440-500, it seems like a hefty premium. i guess the complete disaster scenario is another mode of thinking and drives this broker premium, but it just seems damn high to me. does anyone have any thoughts on this? am i looking in the wrong places??
on Tue, 11/17/2009 - 14:47
#133474
ChickenTeriyakiBoy
SILVER ROUNDS.
I buy product with the lowest overhead ... less to overcome. Generic 1 troy ounce silver rounds give you your best price for the money.
on Tue, 11/17/2009 - 14:57
#133493
You must be looking at eBay. Stay away since you will pay 2x the premium that you would pay elsewhere. The Silver Eagles carry the highest premiums but the best value is in rounds and bars. As I stated above, http://www.tulving.com
on Tue, 11/17/2009 - 14:57
#133492
I get my Eagles for about $2 over spot at the local coin shop (near San Francisco); $25 sounds like a rip off. 100 oz. bars are usually less than $1 over spot (usually around 60 cents).
I have qualms over ordering gold and silver online; I much prefer to buy from a local shop with cash. I make it a monthly thing; it's a form a savings, not an investment.
on Tue, 11/17/2009 - 15:30
#133543
dont trigger the IRS red flags for multiple sales
on Tue, 11/17/2009 - 14:55
#133487
love both silver and gold.... no need to dislike one or the other!!
on Tue, 11/17/2009 - 15:26
#133531
PRECIOUS METALS BITCHES!!!
I am Chumbawamba.
on Tue, 11/17/2009 - 15:27
#133533
Good to own both.
on Tue, 11/17/2009 - 15:13
#133513
Too, lotsa stocks appreciated over 2,200% this year since the March lows.
Not to take anything away from AU, but I'd rather have had an equal number of dollars in CAR, among several others.
on Tue, 11/17/2009 - 15:13
#133514
I like US Junk silver, it sounds good in the pocket!
on Tue, 11/17/2009 - 15:16
#133516
This article misses the point. It's like saying Karen Velez is better than Jenny McCarthy. The thing with the metals is you need to do a "Texas hedge". Long GLD with a hedge long in GDX, GDXJ(new),SLV, bullion in te safe(all four kinds), and a GOLDMONEY account offshore.
You've got to like them all, and trading them is probably as silly as booking a profit on CSCO was in 1992.
on Tue, 11/17/2009 - 15:37
#133556
where's gordo gekko?
trading his gold for silver now?
on Tue, 11/17/2009 - 15:51
#133580
what is the difference between SILV and SLV. Why there is a price difference between them.
on Tue, 11/17/2009 - 19:13
#133875
The ETFs represent one ounce of silver when they open their doors. Every year they sell .4% of the silver to pay for the fee, so every year the fund is open you own an ounce less .4%. Since SILV is brand new, the fees haven't impacted the total amount of silver held by each share. In the case of SLV it's been open a number of years. Therefore each share represents like 2% less than one whole ounce.
SILV is not held by Morgan. It's held in Swiss vaults not London vaults. It is subject to an independent audit every year unlike SLV. Much safer.
Turbo
on Tue, 11/17/2009 - 18:19
#133805
Shameless plug for the REAL DEAL !
:-)
http://www.mundogold.com
cheers
on Tue, 11/17/2009 - 19:26
#133889
Nice plug...LOL.
These are nice...a little high...but I like the design.
https://store.scottsdalesilver.com/product/13/%22The-One%22-by-Scottsdale---1-Oz-Bars%7B47%7DTen-Pack
on Tue, 11/17/2009 - 20:57
#133951
the bullion ETFs are convenient, but a total scam. You're better off with GTU - its like GLD, but with real physical gold. CEF is even better: 55% physical gold, 45% silver.
on Tue, 11/17/2009 - 20:58
#133953
GLD is a scam, buy GTU instead. Or if you want gold with a silver kicker, buy CEF (55% gold, 45% silver).
on Tue, 11/17/2009 - 23:09
#134072
I like Tyler's works but gold presently reminds me of $147 oil that traded $30 months later. Gold is another nasty bubble and I shorted it today. Will add to my short on strength or weakness as time runs out on the gold hype.
on Wed, 11/18/2009 - 06:11
#134277
Thanks for speaking our language Tyler. The # itself is NOT necessarily important, it is about ratios, ratio derivatives, extensions and retracement extensions (best straightforward literature off the top on this topic would be Robert Miner's "Dynamic Trading" and another title, "Fibonacci Trading" from one of his best known students, Carolyn Boroden).
As a raging Socionomist and fan 'o Fib I naturally search out such time cycles and admittedly try to force them once in a while. Armstrong Research's latest on GOLD immediately comes to mind ... count 1597 months forward from where "everything" occurred in the 1860's and into '73, then see what else you can find. Within that piece, the 162 xx for gold's 'free' float is cute but again NOT materially significant (you could argue that it is because it was gold ... will let that run). The 1597 months from inflection to inflection like income tax to housing's peak as evidenced through actual #'s, stock prices (xhb, hd etc., can't speak to the Toll's, Thornburg's and intermediary humongous bank-brokers / hedgies who enabled, not to even mention the Fed, without delving deep into Socionomic nuance) and after the fact price discovery ... count Fib time cycles, like EWI has from African-American and Female Enfranchisement .. that is where the real analytical meat lays. We're currently trying to finish our three submissions to the 2010 Charles H. Dow Award for Excellence in TA ... a small section within one of our papers addresses the practical value of Fib factorials, primes, various divisors and of the fractal nature therein (generally known as periodicity, which is wholly misleading .. another day). Certain Fibs have different characteristic properties, think of optimization across vehicles, instruments and inter-market metrics for trend, interval period of time, tick, volume and especially sentiment ... each require research to adapt small conditionals to your "strategy." This is not for everyone but it is within everyone and everyone is 100% subject to as well as part and parcel of; whether they believe it or not, especially when they don't. To each their own, in all walks of life; whatever works for you.
As for the ratio itself, it is simply a measure of 1) animal spirits, of 2) short run inflation expectations linearly, and rather erroneously, extrapolated with a perpetual upward right skew (read: kudlowian krap), and 3) is most useful as an effective metric to either confirm or not-confirm actual price action, trading signals therein for timing, execution and management.
The metric/ ratio itself is extremely useful as a secondary, coincident and lagging indicator but can only be employed (effectively put to use) within the context of 1) a working knowledge of EWP, 2) a textured understanding of EW Theory, and 3) actual trading indicators/ oscillators and strategies that work.
Great work Tyler & ZH ... looking forward to your upcoming piece on Goldie & the hilarity that is VWAP as a trading "strategy."
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