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Stocks or Silver - Which Is the Better Buy Today?

Published 06/18/2024, 02:25 AM
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Many investors try and say silver is a bad investment because the stock market has outperformed silver depending of course on your starting date. But this comparison of the two is a false pretense as silver is money and the stock market is investing in companies that try to earn a profit each year. But let’s analyze this a bit further to see if today, the stock market or silver is a better buy over the next few years.

Silver Is Money

I have used the analogy of why one has a portion of their portfolio in silver and that is it maintains purchasing power over time. The analogy is that a pre-1965 90% silver quarter will always buy you a gallon of gas. A 1965 quarter will always buy you 25 cents worth of gas.

Stock Market Always Goes Up

Yes, the stock market has had a tremendous bull run. When you have a government throwing over $6 trillion a year into the economy, or wherever they spend it, it trickles down into the stock market. And it’s easy for market makers to make more and more profit by pushing the stock market around. There is no argument there. In the 32 years between February 1992 and May 2024, the S&P 500 index (in EUR) had a compound annual growth rate of 10.89%.

As I type, S&P 500 as represented by SPY just hit a new high of 547.55 with SPX hitting 5488 and about 10 points away from the coveted 5500 mark.

What a run it has been!

But it isn’t true that stock markets always go up. The stock market had the following 6 years of negative returns since the year 2000.

Stocks-Negative Returns

2023 saw a rebound in the stock market go up 24% and 2024 so far the market is up 14.63%.

Decision Time for the Stock Investor

The question investors need to answer at this point, is where is my money best suited moving forward? Is it in a stock market hitting record highs, or a beaten-down asset like silver that is 69% from its all-time high?

That’s where we are right now as it is decision time for the stock investor.

Volatility Will Start to Move Higher

One thing to look for as a stock investor is where volatility is. As of today, the VIX (CBOE Volatility Index) hit a low of 12.50 and presently is sitting at 12.63 down 3 cents. Daily Sentiment Index for volatility is sitting at 15 and up off of 12, the low for the week. Contango was 12.48% as of 6/16/24. Will expect this number to drop in the next couple weeks. It almost always does when it is this high.VIX Futures Term Structure

Gold’s and Silver Price History

Gold and Silvers Price History

You can see the price movements of silver has been kept under $30 an ounce for some time. 3 years of consolidation in the low 20’s and silver is ready for the next big move. Silver peaked over $30 recently and is presently on a small pullback.

Silver is like the beach ball that is pushed under water and once you release the beach ball, it shoots straight up. It would not surprise me that Silver runs to 40 minimum on this next move up. That’s a 35% move higher. The SPX would have to move to 7430 to equate this move in silver. While we are in an election year, and yes there is always politics at play in the market, to expect a move up to 7430 at this point after such a historic run the last couple of years, fueled unprecedented spending by Congress, is pie in the sky thinking. Believe me when I say, the spending won’t stop. But the dollar is also going to lose its supremacy at the same time around the world. I just finished an article on that scenario called Will the U.S. Follow Argentina’s Disastrous Inflation?

Silver or Stocks? 

Silver is your better buy right now over the stock market. Watch for a push higher into the 40s and perhaps a pullback in stocks followed by one more push into the election and then a year or two of lousy returns for the stock market. That’s why I am getting my next book How To Profit In Up and Down Markets out soon.

What do you see over the next few months into the election and post-election? Will 29% of the S&P be the driver or the dog moving forward? I literally had two friends ask me about Nvidia (NASDAQ:NVDA) this weekend. That’s the sign of a fall coming if there ever was one. When they start talking to you about silver in the same fashion, that’s the time to get out. We are a long way from that.

Silver premiums are at the lowest they have been in 4 years. The premiums will move up as the product disappears and you’ll be chasing the price of silver higher. Make a good decision today and buy silver lower. Yes, I do plug silver but for good reason. And we sell it cheaper than everyone else.

Silver is still insurance though, and stocks are fine to invest in for the long run if you know how to pick good companies. If you just invest in an index fund though, expect some craziness in the next couple of years while the price of silver moves higher and higher and eventually breaks its all-time high of 50.

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