The price of silver in mid-March was substantially outside of its 20-year ratio to gold. We sold out of silver at that time and kept our gold. The ratio of the price of silver has since come back toward the upper end of that 20-year relationship. We still prefer gold as a currency hedge, and prefer copper as an industrial metal. The ratio of silver to gold did go a good deal higher after we exited silver, but has since come back in. One never knows how far a vertical rocket ride can go, but whenever a price or a relationship goes nearly vertical, a correction is not far away. That correction has taken place, at least in part. Here are the 20-year monthly charts as of March 17 and today plotting the ratio of the price of silver to the price of gold. These charts (click to enlarge images) show the 1-year, 3-year, 5-year, and 10-year moving averages of the ratio in red text in the upper left corner. The mania could, of course, come back, but the long-term ratios may tend to create a kind of center of gravity. As the two metals revolve around one another, they tend to maintain a certain range in their price ratio. Certainly, over extremely long periods the ratio was and could be quite different, but the ratio evolves instead of exploding over multi-year periods. Disclosure: We hold GLD in some but not all managed accounts as of the publication date of this article. Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice. You are responsible for your own investment decisions. This article is presented subject to our full disclaimer found on our site available here.

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