Silver versus gold for 2024

The iShares Silver Trust NYSEARCA: SLV the exchange-traded fund underperformed SPDR Gold shares NYSEARCA: GLD over the last year, but is it time for the situation to reverse?

Silver mining stocks listed on major U.S. exchanges include Newmont Corp. NYSE: NOWheaton Precious Metals Corp. New York Stock Exchange: WPMBuenaventura Mines Company SAA New York Stock Exchange: BVNCoeur Mining NYSE: CDEFortuna Silver Mines Inc. NYSE: FSMHecla Mining Co. NYSE:HLFirst Majestic Silver Corp. NYSE:AG and Pan American Silver Corp. NYSE: PAAS.

Some of these companies also operate in the mining of gold and other metals.

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

Stock market, Bitcoin rally has dented precious metals

There are a couple of culprits behind the underperformance. First, as stock markets have rallied in recent months, precious metals have lost their luster as a hedge against a recession.

More recently, when the Securities and Exchange Commission gave the green light to Bitcoin ETFs, money flowed away from precious metals and into cryptocurrencies.

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

But even if gold, the most traditional precious metal, were to collapse, would silver be about to take the lead?

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

Investors are looking for gold and silver amid stock market volatility

Rose told MarketBeat that while economic pressures push stock markets and the dollar lower, precious metals have historically shown an inverse correlation.

“When investors are worried, they turn to the higher levels of gold and silver,” he said. “Today, silver in particular is interesting because of the buzz around its industrial uses. We expect silver to experience one of the highest trading volumes in history in 2024.”

Over the past month, the SLV ETF has outperformed the GLD ETF.

Industrial use currently favors silver’s performance, as the white metal is a component of solar panels, electronic devices, water purification systems, automobiles and other items. As industrial stocks as a group have rallied on the potential of lower interest rates and fewer supply chain issues, this bodes well for silver.

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

“Industrial demand for silver has doubled in the past year, and new advances that require the use of the precious metal materialize every week,” he added. “This makes silver particularly attractive to investors who want to be able to quickly liquefy assets if necessary.”

Rose warns that investing in silver stocks carries the same risk and reward potential as any other stock.

Owning Physical Assets Is a ‘Different Game’

“Owning physical precious metals is a different thing that protects against such risks. As any good analyst will admit, a diversified portfolio is a happy portfolio,” she said.

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

Silver often exhibits greater volatility than gold, offering greater potential for short-term gains, which could help silver stocks rise in 2024.

Additionally, silver tends to be cheaper for retail investors, potentially attracting a broader investor base and increasing liquidity in silver stocks.

The report signals that silver may be poised 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.

Additionally, the gold/silver ratio, which measures how many ounces of silver are needed to purchase one ounce of gold, can influence investment decisions at the institutional level.

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

When this ratio is high, indicating that silver is undervalued relative to gold, investors may turn to silver stocks, increasing demand.

Before you consider iShares Silver Trust, you’ll want to hear it.

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