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Silver to gold ratio: why the long silver trade makes sense


Back in 2008 we had a financial crisis and some banks went to the wall. At the time the gold price actually sank in the depths of that crisis, only really rallying as central banks moved to bring in QE (quantitative easing) in the course of 2009. But gold shot up from around $735/oz in November 2008 to hit $1766 in September 2012.

Recently, gold has been exploring those dizzy heights again. Precious metals prices seem to be responding to government efforts to artificially support the economy, this time as a result of the Covid pandemic. The gold price is now trading at levels we have not seen before.

Compare gold with silver: ignore efforts to corner the silver market in 1980, Silver sold off quite heavily AFTER the financial crisis began in 2008, but then it rallied furiously, from $18/oz to hit a peak of about $53. Much of that silver bull occurred in a very short timeframe.

Proportionally speaking, the gains for silver investors, even without leverage, were much bigger than for gold investors. Plus you have the added issue that silver is being consumed at an industrial level now that is fairly unprecedented. Silver was back down at $18-19 in September/October, but it is now rallying again. We smell a possible silver bull and we're keen not to miss this one.

Here's our thesis and how we're buying into silver.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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