• Gold: 1,290.79 -0.70
  • Silver: 17.09 -0.05
  • Euro: 1.181 -0.001
  • USDX: 93.22 -0.716
  • Oil: 58.02 0.86

If gold’s going to be a winner in 2015 then silver will be the real champion as financial markets implode

|
January 6, 2015 - 8:32am

Gold and silver prices have jumped since the start of 2015 as safe haven and dollar diversification plays. But this will be nothing compared to the upside gain to come as financial markets really lose it. Precious metal investors know from long experience that when gold prices go up silver does even better and vice-versa.

Silver is in a tighter market than gold and with a smaller available supply then a rise in demand has a disproportionate impact on its price. It’s also an alternative to gold as prices rise because it is cheaper. The gold-to-silver price ratio is historically very high at the moment at 75, so silver prices have plenty of room to outperform and close up this gap.

Trade of the year?

Buying silver at current prices will probably be the best trade of 2015, unless precious metals get caught out by markets and manipulation like in the past three years. However, the cycle seems well set for gold this year.

Wall Street is poised for a crash if you follow the Quant analysts at the hedge funds. They do get these things wrong but they stay alive by being more right than wrong. US equities have not been this highly valued since 1929, 2000 and 2007, and are way ahead of the 1987 or 1974 crashes in terms of valuation.

For black swans to act as a catalyst for a crash you have quite a choice: the oil price crash that almost always preceeds a stock market crash; the soaring US dollar that makes the US uncompetitive and dices profits from overseas operations; the eurozone’s problems with Greece, Russia and the Ukraine; Japan’s Abenomics Armegeddon; and China’s economic slowdown that’s smashed commodity prices.

Paper or real money?

In a world where valuations of stocks, bonds and real estate have all been inflated by cheap money there has to come a day of reckoning when the money runs out and markets tip over. What do you want to be owning when this happens? Pieces of paper or bullion?

In past financial disasters precious metals have always been the place to be. Even in 2008 gold was the asset to rise fastest and most after the crash, apart of course from silver, and 2008 was unusual for precious metals. Normally they just go up as everything else falls through the floor.

Standby for a good year for gold and a great year for silver!

Your rating: None Average: 3.7 (12 votes)

About Peter Cooper / Commentary Author

Peter Cooper is the editor and publisher of the ArabianMoney investment newsletter and the popular financial comment website www.arabianmoney.net.

Article Comments

Sponsored Links

Live SilverSeek Map