Both gold and silver have made big moves higher so far this year, but silver’s gains of more than 30% year to date are more impressive than gold’s 25% climb and, likely, will continue to be.
“Own gold and silver as soon as you can,” Alex Cowie, editor of Diggers and Drillers, said in a recent report for Daily Reckoning Australia. But “I would choose silver over gold.”
Why?
According to Cowie, the Commitment of Traders report “says buy silver.” The fewer open positions on silver there are, the more bullish the set up because there are “loads of potential buyers out there who haven’t entered the market,” he explained.
The gold-to-silver ratio also favors silver, he said. Gold is roughly 15 times more rare than silver in nature and right now, you need about 44 ounces of silver to buy one ounce of gold. That ratio is heading back to where it belongs and could close in on its long-term mean of 15. At the same time, there’s no more silver to spare and investment demand for the white metal is soaring, said Cowie.
“There isn’t even enough silver bullion in the world to supply one ounce per Chinese citizen,” he said. “It doesn’t take much imagination to see where this is heading.”
At last check, gold futures GC1Z were trading around $5 lower, while silver SI1U was down 25 cents.
