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Silver shaping up to outshine gold in the months ahead

The National:

While gold prices rose by almost 13 per cent in 2017, their best year since 2010, the precious metal’s precious shinier sister silver only managed half that gain. Usually it is the other way around with silver acting as a leveraged play on the gold price. Ergo higher gold prices generally mean even higher silver prices. So has something fundamental changed? Or could silver snap back with some really spectacular gains in 2018, particularly if the nascent bull market in gold we have seen so far this year picks up speed? Could that make silver the standout choice for maximum gain in a year when commodities significantly outpace stocks, bonds and real estate? Bear in mind that we have already seen $70-a-barrel oil in January, only last month regarded as a slightly ambitious prediction for the entire year.

It was certainly the case in 2011, when gold hit an all-time high of $1,923 an ounce, that silver put in an even better performance, coming within a whisker of its 1980 all-time high of $48. But why did silver underperform last year? It should have been doing better if the relationship between the prices of the two precious metals was to hold true. Well goldbugs tell me it is not unusual for gold to lead off a new bull market in precious metals. It’s always gold that is in the headlines and it’s gold that they stack away in the central bank vaults of the world.

However, the unmistakable fact is that the above ground stock of silver in the world is but a tiny fraction of gold reserves and the supply of silver is relatively fixed. Hence this is a tighter market and it does not take much of an increase in demand to juice prices strongly upwards. There is something else you need to know about silver. JP Morgan has allegedly cornered this market over the last seven years. Today 45 per cent, or 675 million ounces, of all above ground silver is now controlled by this single bullion bank, according to veteran silver analyst Theodore Butler.

He contends that JP Morgan has been suppressing the price of silver for many years so that it could accumulate this quantity of silver at low prices. Now in the past silver prices have always eventually spiked highest when a monopolist was at work in the market place