In the last week, the price of the white metal has moved up from $15.51 to $17.35. (as I type this on Tuesday morning May 19) That’s an 11.9% increase.
With the jump in the price of silver, the silver-gold ratio has dropped from over 113–1 earlier this month to 101–1 today.
In early May, we reported that silver hasn’t been this undervalued when priced in gold in over 5,000 years of human history. Although the silver-gold ratio has close, the while metal remains historically inexpensive compared to gold. We still effectively have silver on sale.
At its peak in March, the silver-gold ratio hit an all-time high of over 120–1.
Analysts have been expecting silver to break out. A recent article in the Financial Times declared, “Investors make big bets on silver closing giant gap with gold.” The report points out that since silver hit an 11-year low back in March, holdings of silver-backed ETFs have surged, hitting a record high of 675 million ounces.
Silver took a similar track during the 2008 financial crisis. The price of the white metal dropped precipitously along with gold in the early days of the crisis. But once Federal Reserve quantitative easing kicked in, silver rallied along with gold and hit near-record highs. In fact, silver outperformed gold between early 2009 and 2011, rallying a staggering 440%.
Source: SchiffGold
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