Silver Rallies But Gold Drops
Over the last several years silver has disappointed the bulls. The price of gold has been rising steadily and even accelerated over the last few weeks. By contrast silver is still at a fraction of its all-time high.
Silver has not taken part in gold’s surge but it has dropped when gold has been weak. That has been a difficult reality for investors to accept. Historically silver has been a high beta version of gold. That is particularly true in the 2nd and 3rd perception stages of the bull market.
Since gold hit a new all-time high as recently as Monday, it would have been reasonable to expect silver to do the same.
The reasons it has failed to capture the imagination of investors tells us a lot about how this trend in gold has been evolving.
The primary buyers of gold have been those seeking to take physical delivery. That’s global central banks and those willing to deal with the hassle of storing bars.
Since gold is almost twice as dense as silver and does not oxidise like silver it is much more preferable as a reserve asset. That focused attention on gold at the expense of silver.
The big question today is what has changed. Gold dropped $92 and silver rose $1.08. That’s not something we have seen in the last several years.