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Read commentary from industry experts and SWP's feature writers.
The gold/silver ratio keeps climbing. And climbing and climbing. When is this darn thing going to reverse and see silver finally outperform gold? While no one really knows the answer to that question, there are hints that can tell us when things might shift. And just how big that shift might be. Let’s look at some history and some data and see what it tells us…
As precious metals investors know all too well, gold and silver prices haven’t moved much for the past 5+ years. And along with that stagnant price environment has come low volatility. Volatility readings have fallen so far, in fact, that silver has matched its all-time low. It’s further confirmation of the widespread disinterest in precious metals.
As we outlined in our silver supply/demand crunch article, the silver market has entered a structural imbalance. It is not temporary. Global supply is locked into a decline, leaving the industry ill-equipped to respond meaningfully to any spike in demand of physical metal for the foreseeable future.
Annual supply is in a major decline. And the downtrend is getting worse. New supply for silver has now dropped for four consecutive years, and is widely projected to fall this year as well. Supply didn’t even fall during the “nuclear ‘90s”, the period where miners couldn’t turn a profit due to stagnant silver prices. But it is now.
One of gold’s biggest catalysts throughout history has been inflation. Debase your currency enough and gold responds almost automatically. And the bigger the inflation, the bigger gold’s response. Even the fear of inflation ignites the gold price, like we saw from 2009 to 2011.
But what if I told you that when selling certain types of coins, you could gain another layer of profit when you sell? A little leverage on the spot price when it rises. It’s entirely possible. Here’s how…
It’s true the Hunt Brothers bought a lot of silver back then. And it’s hard to imagine their involvement didn’t impact the price. If you recall, silver rose a whopping 3,105% from its 1970 low to 1980 high. But were the Hunt Brothers the primary reason for such a dramatic spike in price? This is an important topic, because if silver’s biggest modern-day mania was the result of a one-off event, then maybe we shouldn’t expect it to rise like that again.
While a myriad of forces pushed the gold price around in 2018, it basically ended the year flat. This report recaps the year in gold, shows how it compared to other asset classes in both short and long timeframes, and explores the factors to watch in 2019.
Liberal economist Paul Krugman proclaimed earlier this year that “gold is dead.” An Economist article stated that “there is no point in investing in gold, any financial investment is better.” And Warren Buffett, one of the most successful investors of modern times, has never liked gold.