Get 40% Off
🚀 Our AI Picked 6 Stocks that Jumped +25% in Q1. Which Picks Will Soar in Q2?Unlock full list

Silver Set to Outperform in 2024 as Gold Loses Luster

Published 02/20/2024, 01:57 AM
Updated 09/29/2021, 03:25 AM
  • The iShares Silver Trust ETF has trailed the SPDR Gold Shares ETF over the past year, but one industry insider says silver may take the lead in 2024.
  • Silver has applications in red-hot industries such as green energy and medical tech.
  • The gold-to-silver ratio, currently high, could drive demand for silver stocks if it indicates undervaluation.

The iShares Silver Trust (NYSE:SLV) exchange-traded fund has underperformed the SPDR® Gold Shares (NYSE:GLD) over the past year, but is it time for the situation to reverse?

Silver mining stocks listed on major U.S. exchanges include Newmont Goldcorp Corp (NYSE:NEM), Wheaton Precious Metals Corp (NYSE:WPM), Compania de Minas Buenaventura SAA ADR (NYSE:BVN), Coeur Mining (NYSE:CDE), Fortuna Silver Mines (NYSE:FSM), Hecla Mining Company (NYSE:HL), First Majestic Silver Corp (NYSE:AG) and Pan American Silver Corp NQ (NYSE:PAAS).

Some of those companies also have operations in the area of gold mining, as well as other metals.

As a group, gold and silver miners have lagged behind most others.

Equity Market, Bitcoin Rallies Dented Precious Metals

There are a couple of culprits behind the underperformance. First, as equity markets rallied in recent months, precious metals lost their glitter as hedges against a downturn.

More recently, as the Securities and Exchange Commission gave the nod to Bitcoin ETFs, money has been flowing away from precious metals and toward cryptocurrencies.

The Bitcoin ETFs have been marketed as an alternative to gold as a way to store value due to its scarcity, relative to other assets.

But even if gold, the more traditional precious metal hedge slumps, is silver about to rotate into leadership?

Jonathan Rose, co-founder and CEO of Genesis Gold Group, a Los Angeles company that guides investors toward gold and silver as a means of wealth preservation.

Investors Seek Gold and Silver Amid Stock-Market Volatility

Rose told MarketBeat that as economic pressures drive down equity markets and the dollar, precious metals have historically shown an inverse correlation.

“When investors are concerned, they go to the higher ground of gold and silver,” he said.

“Today, silver in particular is interesting because of the buzz around its industrial uses. We expect silver in 2024 to have one of its highest trading volumes in history.”

In the past month, the iShares Silver Trust (NYSE:SLV) ETF has outpaced the SPDR® Gold Shares (NYSE:GLD) ETF.

Industrial usage currently favors the performance of silver, as the white metal is a component in solar panels, electronics, water purification systems, cars and other items. As industrial stocks as a group rally on the potential for lower interest rates, and on fewer supply-chain hassles, that bodes well for silver.

Two of the fastest-growing industries, green energy and medical technologies, rely on silver, Rose said.

“Industrial demand for silver doubled last year and new advancements requiring the precious metal are materializing every week,” he added.

“This makes silver particularly attractive to investors who want to be able to liquefy assets quickly if necessary.”

Rose cautions that investing in silver stocks comes with the same risk and reward potential as any other stocks.

Owning the Physical Commodities Is 'Different Ballgame'

“Owning physical precious metals is a different ballgame that hedges against those risks. As any good analyst will admit, a diverse portfolio is a happy portfolio,” he said.

For investors who prefer using stocks rather than holding the hard assets or commodities themselves, many of the precious metals stocks are issued by small companies, which can add risk and reduce volatility.

Silver often exhibits higher volatility than gold, offering greater potential for short-term gains, which could contribute to silver stocks rallying in 2024.

In addition, silver tends to be more affordable for retail investors, potentially attracting a broader investor base and increasing liquidity in silver stocks.

Ratio Signals Silver May Be Ready to Rally

For example, the SPDR Gold Shares chart shows the ETF trading at around $186, while the iShares Silver Trust chart shows a price between $21 and $22.

Furthermore, the gold-to-silver ratio, which measures how many ounces of silver it takes to buy one ounce of gold, can influence investment decisions on an institutional level.

The current gold-to-silver ratio is 88.959, higher than the historical average.

When this ratio is high, indicating silver is undervalued relative to gold, investors may pivot towards silver stocks, driving up demand.

Original Post

Latest comments

hi
bitdoin up
Adding Gato Silver
bought more GATO silver not selling till at least 20 bucks
Gold might be losing it's luster but bought JNUG around 21.7 I'm doing OK
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.