Loading ...Gold & Silver – Long term Historical Price Perspective
Musing about historical gold and silver prices led me to research back to the depression era when the US was still on the gold standard. So having read but forgotten the gold price in 1933 when FDR made it illegal to “hoard” gold, I remembered gold turned in by executive order fetched $20.67 from the government. After he raised the price and then Nixon later officially stopped redeeming US dollars from other foreign govts at $35 per ounce, gold reached it’s modern high at basically $2100 in 2020. We can say gold increased 100 fold from $20.67 in 1933. Silver, I was shocked to see actually got as low as .25 cents during the depression despite having a once official price of $1.29 in I believe the late 1700’s early 1800’s from actual legislation. The point is when silver first rose to $50 in 1980 it represented an over 40 fold increase fron that once official price or a 200 fold increase from the market price at the depth of the depression. Various commentators have stated that silver usually lags gold, plays catch up and exceeds gold’s moves, both up and down by approximately 2-1. If we start for arguments sake at golds low at the end of 2015 of just above $1000 to it’s so far high around $2100 we have a double. Silver during this phase has gone from a low around $14 in Late 2015 with a lower low during 2020 around $12 to $30 as a high so far. Again, originally lagged, shot up faster and greater percentage wise than gold during the 2020 rally. During this two year consolidation phase silver once again under performs, until it doesn’t. Whatever gold does from here, it always goes higher over the long term because we keep increasing the number of dollars, silver will eventually catch up and out perform in percentage terms. Be long, be strong and most of all be patient.
One thing that I did not recognize and should have was the understanding that silver’s accelerated advance vs. gold in July of 2020 was the signal that the 2 year cyclical bull market in PMs was ending. It’s just another example of silver playing catch-up in the end of a cycle. Since Aug 2020 I the PM stocks are in a cyclical bear market. I came to understand this by March 2021. No doubt its a hard to define one likely because it is embedded in a secular bull market therefore we have had some issues go to new highs, but as a whole stocks remain very heavy and I believe are headed lower consistent with my bear market thesis.
Gold does indeed go higher over the long term, however that does not justify riding gold and silver stocks into the basement. They are just too deeply cyclical to do that. One has to be a trader to be in this sector.
That may be true for the miners. For the metals just buy and hold and dollar cost average.
I am speaking strictly towards the miners. Regarding gold it’s a buy and hold. Silver… due to its industrial component I think one should trade it.