Skip to content

Silver is More Volatile than Gold – Like “Gold on Steroids”

Gold pierced the $2,000 “barrier” last week and stayed above $2,000 all week, reaching a record high of $2,078. Silver soared to $29.90 before correcting – an amazing 149% run from barely $12 last March. The gold-to-silver ratio had dropped from 125-to-1 in March to a historically normal 70-to-1 Monday

Silver’s rapid rise to $29 is not without precedent. In 2011 as well as 1980, silver spiked to nearly $50 an ounce when gold was rising at a more moderate pace. The major reason for silver’s more rapid rise is that it is a much narrower market, so that the same amount of money entering the silver market will drive it much higher than the gold market, on a percentage basis. When the metals markets are rising, silver will often attract more money since it is more affordable to more investors than the higher-priced gold.

Brokerages are starting to back silver: TD Securities said that “Silver continues to outperform and remains our precious metal favorite.… strong investment flows and robust industrial demand combine for strong performance at a time when the microstructure creates a disincentive for silver bullion traders to sell.”   

Here are some of silver’s fundamental market advantages over gold from a trading perspective

Smaller Supply: The annual supply of new silver is around one billion ounces, while the annual supply of gold is 120 million ounces. Using the start-of-year prices of $1515 gold and $18.04 silver, that’s about $18 billion in silver vs. over $180 billion in gold – or 10 times as much gold capitalization as silver.

This explains why silver is far more volatile than gold. If $10 billion moved into the silver market, it would push silver prices up sharply, but it would only move gold up slightly, and it probably wouldn’t budge Apple stock.  Both gold and silver are tiny specks of stock market dust compared to stocks like Apple, now worth $2 trillion – or Microsoft or, worth $1.6 trillion each. It takes 10 years of newly mined gold and silver to equal the market value of Apple, so precious metals are still grossly undervalued.

Affordability. Another reason silver moves faster than gold is that more investors can afford silver than can afford gold. That’s why it’s called “poor man’s gold.” This was the basis of the Presidential elections of the 1890s – the silver (or bi-metallic) standard vs. gold standard. The Eastern establishment favored the gold standard, but the western farmers and miners could not afford to buy even a single ounce of gold.

The Democratic candidate William Jennings Bryan criticized the gold standard and favored inflating the currency by the free coinage of silver, which gained favor in that deflationary age among the debt-ridden farmers whom Bryan championed. In 1896, he gained fame his speech, ending: “You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.”

Industrial demand. Silver also has far more industrial uses than gold, so when the global economy recovers, silver should perform better than gold, but that angle is not in play this year. In normal times, silver demand is 60% industrial and 40% investment. This year, silver’s investment angle has prevailed.

ilver is More Volatile than Gold – Like “Gold on Steroids”

Gold pierced the $2,000 “barrier” last week and stayed above $2,000 all week, reaching a record high of $2,078. Silver soared to $29.90 before correcting – an amazing 149% run from barely $12 last March. The gold-to-silver ratio had dropped from 125-to-1 in March to a historically normal 70-to-1 Monday





Continue reading "Silver is More Volatile than Gold – Like “Gold on Steroids”"

Silver shoots above twenty dollars an ounce.

1st American Reserve celebrated the upward movement of silver during these trying times.  While I was writing this short entry silver was hovering at $21.35 Change Shortagewhich is a  seven percent move upward from the previous day.  Just yesterday we posted an article which was writen last year in late July predicting this event in silver price movement and we are proud to see it now happening.  Another interesting event regarding coins talked about in the news lately is the lack of coins. 

The news is reporting that since fewer people are shopping and going out to eat and drink, there are fewer coins in circulation. The pandemic has also disrupted production at the U.S. Mint and has retailers, restaurants and banks in search of coins bearing Lincoln, Jefferson, FDR and Washington.


Continue reading "Silver shoots above twenty dollars an ounce."

U.S. Mint Sales Were Slower in May but Are Up Strongly in 2020

Total sales of bullion coins by the U.S. Mint slowed from their torrid pace in March, but they are still up strongly above the same five months in 2019.  For the first five months of 2020, sales of American Eagle gold coins total 335,000 Troy ounces, up 222% from the 104,000 ounces sold last year. This May, the Mint sold 11,500 ounces, down from April, but 187% above the 4,000 ounces sold in May 2019.

Sales of American Eagle silver coins reached 490,000 ounces in May 2020. Although down from April and from last May, this brings the total American Silver Eagle sales for the year to 11,218,500 one-ounce coins, which is 25% more than the 8,987,000 coins sold through the same five months in 2019.

American Buffalo gold coin sales totaled 2,500 ounces in May, lifting their year-to-date total of 118,500 ounces, which is 166% above their sales level for the first five months of 2019, when they totaled 44,500 ounces.

One reason bullion coin sales were down in April and May was the Mint was often closed due to coronavirus concerns. If the Mint were open more days, sales would likely have been much higher.

Whenever gold and silver prices are rising, as they are now, coin dealers place more ads, and those ads bring in more new customers than usual. As you watch cable TV coverage of various crisis events, you will notice this proliferation of ads. After those new customers buy bullion coins. Within 6-24 months, a good percentage (say 10% to 20%) will graduate into rare coins, often pushing up the prices of rare coins.

Silver is Making a Move

Silver is making a move above $17, while gold remains above $1,735, although correcting from its 7-year high above $1,760. On Monday, May 18, silver rose almost 50 cents (+3%) while gold fell $10 (-0.6%). On May 5, the gold-to-silver ratio was 115-to-1 ($1,700 to $14.75), but since then silver is up 16.5% and gold is up only 2.5%, so the gold-to-silver ratio is down to 101-to-1 in the last two weeks. That’s the lowest gold-silver ratio in the last two months.  If you want to buy silver, please call us to learn about some of the best silver values in the industry!