Silver – Alternative to Gold

In our previous blog around Gold, we shared some ways to invest into the gold precious metal asset class. To extend this hedge theme more, one can also look at silver rather than gold. In addition to its industrial value, silver is also normally recognized as “Poor man’s gold” on the inflation hedging front, but it is less visible than gold. Gold tends to get a lot more media coverage. Because of media attention, the gold-to-silver price ratio sometimes goes beyond historic norm. The best time to look at silver vs gold is when gold to silver price ratio is out of line compare to historic value.

Here is a chart on the gold to silver price ratio for the last 5 years. If you click on the chart, you can see the 100 year history of this ratio.

As we can see, in March and April of this year, the gold to silver ratio is way above the norm. In this case, it is generally better to buy silver than gold. So what would happen if you buy silver vs gold in March 2020? Below is the chart for the last 6 months. You can see silver (SLV) performs much better than gold (GLD)

If you are more aggressive, you can leverage it up with ProShares Ultra Silver (AGQ). AGQ is 2x more volatile than silver (SLV), so it provides maximum leverage around this investment theme. Below is another chart with AGQ included.

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