Silver could surprise the market with another rally. When and why?

Silver Begins to Outperform Gold

The ratio between the two metals is historically low, making silver look very cheap with significant growth potential.

Gold has experienced some explosive movements in its history, such as in the late 70s and around the Eurozone crisis.

But in both cases, the rally in silver was even more extreme (due to the infamous “cornering” by the Hunt brothers, which led to more than a 5x increase in 1979).

The primary reason often cited for gold’s rally is tariffs, which leads to a widening gap between the price of gold on COMEX (i.e., “paper” gold through futures contracts traded in New York) and the physical price of gold determined in London. However, I believe this is a convenient narrative.

The more distant reason is likely the shortage of physical gold for delivery in London after years of accumulation by central banks in emerging economies.

We are seeing the same dynamic with silver as we see with gold. COMEX silver stocks in the US are filling up, while inventories in London are declining.

Historically, silver has often caught up with and surpassed gold’s growth. The current market situation shows signs that this could happen again.