The Bull Market in Silver

Precious metal markets remained firmly bid across the course of this week, with gold last trading just below USD $3,400 per troy ounce (oz), while platinum has pushed up toward USD $1,300oz.

Silver also continues to strengthen, now trading at USD $36.31oz, with the precious metal so far delivering a calendar year to date return in USD of +25%.

The move in silver is particularly eye catching given silver is:

• Well supported by a combination of rising investment, and robust industrial demand.

• Supply side concerns which suggest meaningful increases in production won’t be easily forthcoming.

• Now trading at a 13-year high, with current price levels not seen since the last price spike more than a decade ago.

• Technically looking very strong above USD $35oz, a level that now resembles a price floor, rather than a price ceiling.

• Now strongly outperforming gold, evidenced by the recent decline in the gold to silver ratio (GSR), which is currently sitting at 93, after rising toward 105 in May of this year.

Clients at ABC Bullion have well and truly responded to the recent price spike, with overall demand rising accordingly this year.

History would suggest those adding silver to their portfolio could be very well rewarded, as we may be in the early stages of a major bull market move.

For evidence of this, consider the chart below, which shows the performance of silver, on a rolling 10 year basis, from the beginning of the 1970s through to today.

As you can see, in prior precious metal bull markets, silver often delivered returns of 1000%, with the most recent major bull market cycle starting in the early 2000s, before ending in 2011.

In that bull market run, silver went from just over USD $4oz, to almost USD $50oz.

Many would argue this silver bull market cycle began when COVID hit, with the onset of the pandemic seeing silver fall just below USD $14oz.

It has more than doubled since, but history suggests it may have a lot further to go.

Market Leader in Precious Metal Bull Markets

ABC Bullion published a whitepaper on silver investing in July 2024. Titled Silver: A Sterling Investment, the whitepaper looked at the industrial demand for this unique precious metal, the overall supply/demand picture, and the investment case for allocating part of a portfolio to silver.

While prices have rallied substantially in the near 12 months since that report was published, the key takeaways remain as relevant as ever.

Amongst those are the fact that:

• Silver has historically been the best precious metal to hedge high rates of inflation, with average annual returns of 17.4% in years inflation is 3% or higher,

• Silver has historically been positively correlated to a rising stock market,

• Silver traditionally outperforms gold in precious metal bull markets.

The chart and table below speak to that last point, highlighting the fact that silver has outperformed gold by more than 250% in these bull market cycles.

Data like that seen above, as well as the broader macroeconomic, market and monetary factors driving investor decisions will likely see far more investment demand for silver in the period ahead.

Jordan Eliseo
General Manager, ABC Bullion Australia

^{Disclaimer: This document has been prepared by Australian Bullion Company (NSW) Pty Limited (ABN 82 002 858 602) (ABC). The information contained in this document or internet related link (collectively, Document) is of a general nature and is provided for information purposes only. It is not intended to constitute advice, nor to influence any person in making a decision in relation to any precious metal or related product. To the extent that any advice is provided in this Document, it is general advice only and has been prepared without taking into account your objectives, financial situation or needs (your Personal Circumstances). Before acting on any such general advice, we recommend that you obtain professional advice and consider the appropriateness of the advice having regard to your Personal Circumstances. If the advice relates to the acquisition, or possible acquisition of any precious metal or related product, you should obtain independent professional advice before making any decision about whether to acquire it. Although the information and opinions contained in this document are based on sources, we believe to be reliable, to the extent permitted by law, ABC and its associated entities do not warrant, represent or guarantee, expressly or impliedly, that the information contained in this document is accurate, complete, reliable or current. The information is subject to change without notice, and we are under no obligation to update it. Past performance is not a reliable indicator of future performance. If you intend to rely on the information, you should independently verify and assess the accuracy and completeness and obtain professional advice regarding its suitability for your Personal Circumstances. To the extent possible, ABC, its associated entities, and any of its or their officers, employees and agents accepts no liability for any loss or damage relating to any use or reliance on the information in this document. It is intended for the use of ABC clients and may not be distributed or reproduced without consent. © Australian Bullion Company (NSW) Pty Limited 2020.}