WEBVTT 00:00:00.000 --> 00:00:02.640 Welcome to the Deep Dive. Great to be here. So 00:00:02.640 --> 00:00:04.759 today we're digging into something a lot of investors 00:00:04.759 --> 00:00:08.800 think about. Silver versus gold. How do they 00:00:08.800 --> 00:00:11.839 really compare over time? Yeah, it's a classic 00:00:11.839 --> 00:00:14.859 question. We're using Doug Young's piece. How 00:00:14.859 --> 00:00:17.760 does the performance of silver compare to gold 00:00:17.760 --> 00:00:20.440 over time, as our guide? A good starting point. 00:00:20.570 --> 00:00:23.489 And the mission today, really boil it down, get 00:00:23.489 --> 00:00:26.149 the key insights on how these two medals have 00:00:26.149 --> 00:00:28.370 performed historically, what makes them different. 00:00:28.530 --> 00:00:31.170 Exactly. Cut through the noise, understand the 00:00:31.170 --> 00:00:34.250 core behaviors, and what drives them. OK, so 00:00:34.250 --> 00:00:38.189 let's jump right in. Looking at, say, 2000 to 00:00:38.189 --> 00:00:41.649 2024, what do the numbers show? Well, the averages. 00:00:42.200 --> 00:00:45.780 Gold comes in around 8 % annual growth. Silver's 00:00:45.780 --> 00:00:48.439 a bit lower, maybe around 7%. So gold's slightly 00:00:48.439 --> 00:00:51.039 ahead on average. On average, yes. But that word 00:00:51.039 --> 00:00:53.200 average can hide a lot, can't it? Absolutely. 00:00:53.520 --> 00:00:55.759 The journey to those averages seems very different. 00:00:55.820 --> 00:00:57.460 Totally different paths. Which brings us straight 00:00:57.460 --> 00:00:59.479 to, I think, a fundamental point the article 00:00:59.479 --> 00:01:02.799 makes, volatility. Silver just seems to swing 00:01:02.799 --> 00:01:05.280 more wildly. It does, generally speaking. Why 00:01:05.280 --> 00:01:09.319 is that? Well, gold. It's seen as this, uh... 00:01:10.029 --> 00:01:12.930 established safe haven asset, you know, limited 00:01:12.930 --> 00:01:15.390 supply, deeply ingrained as a store of value. 00:01:16.049 --> 00:01:18.349 Investors often turn to it to preserve wealth 00:01:18.349 --> 00:01:20.890 when things feel uncertain. Right, the traditional 00:01:20.890 --> 00:01:23.450 anchor. Exactly. So it tends to be, well, more 00:01:23.450 --> 00:01:25.459 stable. But silver's got this other dimension, 00:01:25.620 --> 00:01:27.900 hasn't it? The article mentions the smaller market 00:01:27.900 --> 00:01:31.459 size, sure, but also significant industrial demand. 00:01:31.719 --> 00:01:34.000 That's the key differentiator, I think. It's 00:01:34.000 --> 00:01:36.260 use in electronics, solar panels, all sorts of 00:01:36.260 --> 00:01:38.500 industrial processes. So that demand can really 00:01:38.500 --> 00:01:41.329 push the price around. Precisely. When industry 00:01:41.329 --> 00:01:44.170 is booming, demand for silver shoots up and the 00:01:44.170 --> 00:01:46.230 price can follow pretty rapidly. It's got this 00:01:46.230 --> 00:01:48.849 dual personality, precious metal and industrial 00:01:48.849 --> 00:01:51.629 commodity. Which creates more potential ups and 00:01:51.629 --> 00:01:54.150 downs. Definitely more ups and downs. But interestingly, 00:01:54.390 --> 00:01:56.549 sometimes during high inflation or big economic 00:01:56.549 --> 00:01:59.230 scares, that same industrial pull can actually 00:01:59.230 --> 00:02:01.989 make silver outperform gold, offering potentially 00:02:01.989 --> 00:02:05.109 higher returns. But yeah, with more risk. So 00:02:05.109 --> 00:02:08.210 those averages, 8 % and 7%, they really do mask 00:02:08.210 --> 00:02:11.009 some drama. The article points out some specific 00:02:11.009 --> 00:02:13.710 years where silver just exploded. Oh, absolutely. 00:02:13.889 --> 00:02:17.870 Like what, 2004 saw a 36 % jump, and 2006 was 00:02:17.870 --> 00:02:21.210 nearly 59%. Yeah, huge years. And then you had 00:02:21.210 --> 00:02:25.990 2010 and 2011 too, over 37 % and even like 73 00:02:25.990 --> 00:02:29.439 % gains. Wow. And even recently, 2024 showing 00:02:29.439 --> 00:02:33.120 a strong 26 .5 % gain. Yeah. What tends to drive 00:02:33.120 --> 00:02:35.539 those massive spikes? Typically, you see strong 00:02:35.539 --> 00:02:37.979 global economic growth, maybe specific tech booms 00:02:37.979 --> 00:02:40.479 really kicking in, driving up that industrial 00:02:40.479 --> 00:02:42.379 consumption we talked about. It links right back 00:02:42.379 --> 00:02:44.520 to that industrial demand factor. Makes sense. 00:02:44.520 --> 00:02:45.800 But then there's the other side of the coin, 00:02:46.000 --> 00:02:48.620 years where gold did much better or silver actually 00:02:48.620 --> 00:02:52.960 lost ground. The article mentions 2001, 2013, 00:02:53.219 --> 00:02:56.639 2014, 2018, 2022. Yeah, and those periods, you 00:02:56.639 --> 00:02:59.270 often had other factors at play, maybe a stronger 00:02:59.270 --> 00:03:01.569 US dollar, which can make commodities more expensive 00:03:01.569 --> 00:03:04.590 elsewhere, or slower industrial activity. Sometimes 00:03:04.590 --> 00:03:06.909 in really big crises, investors might just pile 00:03:06.909 --> 00:03:09.069 into gold as the ultimate safe haven, leaving 00:03:09.069 --> 00:03:11.379 silver behind a bit. OK, let's zoom out a little. 00:03:11.500 --> 00:03:13.719 The article gives some historical context looking 00:03:13.719 --> 00:03:16.060 back before 2000. What does that longer view 00:03:16.060 --> 00:03:18.800 tell us? Well, looking way back, gold generally 00:03:18.800 --> 00:03:22.139 shows that steadier sort of upward trend over 00:03:22.139 --> 00:03:25.900 decades, often tied to inflation, currency worries, 00:03:26.460 --> 00:03:29.400 geopolitical stuff, reinforcing its role as a 00:03:29.400 --> 00:03:31.800 hedge. The inflation protector, the currency 00:03:31.800 --> 00:03:34.080 hedge. Pretty much. And silver's longer story, 00:03:34.300 --> 00:03:36.319 more of the same volatility we saw recently. 00:03:36.460 --> 00:03:38.520 Yeah, pretty much mirrors it. More pronounced 00:03:38.520 --> 00:03:41.069 peaks and troughs through history again because 00:03:41.069 --> 00:03:43.930 of that dual role. The article mentions the the 00:03:43.930 --> 00:03:46.430 famous silver spike in the 1980s that was a wild 00:03:46.430 --> 00:03:48.530 ride wasn't it? It really was and what's interesting 00:03:48.530 --> 00:03:51.270 there is you had strong industrial demand yes 00:03:51.270 --> 00:03:54.789 but also a lot of speculation laid on top. Ah 00:03:54.789 --> 00:03:57.150 speculation. Yeah that really amplified the moves 00:03:57.150 --> 00:03:59.849 a classic example of how silver can get caught 00:03:59.849 --> 00:04:02.330 up in these big swings often followed by a you 00:04:02.330 --> 00:04:04.849 know a correction. It's clearly not just about 00:04:04.849 --> 00:04:08.139 the metal itself these external factors. The 00:04:08.139 --> 00:04:11.400 economy, interest rates, they play a huge role, 00:04:11.560 --> 00:04:13.319 don't they? Absolutely critical. Inflation, for 00:04:13.319 --> 00:04:16.079 instance. Rising inflation often boosts interest 00:04:16.079 --> 00:04:18.980 in gold. To preserve buying power. Exactly. But 00:04:18.980 --> 00:04:21.620 then, if central banks react by hiking interest 00:04:21.620 --> 00:04:24.040 rates significantly. That makes holding gold, 00:04:24.100 --> 00:04:26.120 which doesn't pay interest, less attractive. 00:04:26.620 --> 00:04:29.300 Potentially, yes. Compared to bonds or savings 00:04:29.300 --> 00:04:32.160 accounts that start offering higher yields. Silver 00:04:32.160 --> 00:04:34.860 fuels these, too. But that industrial demand 00:04:34.860 --> 00:04:37.800 adds another layer. Another reaction mechanism. 00:04:38.360 --> 00:04:41.040 And then there's the unpredictable stuff. Global 00:04:41.040 --> 00:04:45.160 politics, crises, wars. Right. Those often trigger 00:04:45.160 --> 00:04:47.740 a flight to safety. Meaning demand for both gold 00:04:47.740 --> 00:04:51.279 and silver goes up. Generally, yes. Think back 00:04:51.279 --> 00:04:54.439 to the 2008 financial crisis gold surged. Silver 00:04:54.439 --> 00:04:57.480 often gets a lift too. But again, how much depends 00:04:57.480 --> 00:04:59.579 partly on what's happening with its industrial 00:04:59.579 --> 00:05:02.300 demand at the same time. It can complicate the 00:05:02.300 --> 00:05:04.860 picture. add to the volatility. Let's dig into 00:05:04.860 --> 00:05:06.980 supply and demand a bit more. Sounds like they're 00:05:06.980 --> 00:05:09.439 quite different for gold and silver. They are. 00:05:09.699 --> 00:05:12.160 Gold supply side is, well, relatively stable. 00:05:12.579 --> 00:05:15.259 Comes from mining, some recycling. Demand is 00:05:15.259 --> 00:05:17.759 jewelry, investment, and importantly, central 00:05:17.759 --> 00:05:20.040 bank buying. Central banks holding gold reserves. 00:05:20.300 --> 00:05:22.339 Correct. It creates a fairly predictable balanced 00:05:22.339 --> 00:05:24.740 equation which helps with price stability. But 00:05:24.740 --> 00:05:26.920 silver's equation is more complex because of 00:05:26.920 --> 00:05:30.550 industry. Way more complex. You still have investment 00:05:30.550 --> 00:05:33.290 in jewelry demand, but that industrial slice 00:05:33.290 --> 00:05:36.250 of the pie is huge, and it's growing. Growing? 00:05:36.509 --> 00:05:38.709 Yeah, think about electric vehicles needing silver, 00:05:39.069 --> 00:05:41.230 the big push for solar panels, which use a lot 00:05:41.230 --> 00:05:44.509 of silver. As these technologies advance and 00:05:44.509 --> 00:05:47.110 scale up, that demand can really put pressure 00:05:47.110 --> 00:05:49.629 on prices. That's a really important dynamic. 00:05:49.810 --> 00:05:51.850 Now, the article spends some time on the gold 00:05:51.850 --> 00:05:53.769 -silver ratio. Can you break that down for us? 00:05:53.769 --> 00:05:56.310 What is it? Sure. It's actually pretty simple. 00:05:57.040 --> 00:05:59.180 It's just how many ounces of silver you need 00:05:59.180 --> 00:06:02.220 to buy one single ounce of gold. OK, like a direct 00:06:02.220 --> 00:06:05.040 price comparison. Exactly. And it's used as a 00:06:05.040 --> 00:06:07.220 kind of indicator of relative value between the 00:06:07.220 --> 00:06:10.480 two. How so? Well, if the ratio is really high, 00:06:10.660 --> 00:06:12.620 meaning you need a lot of silver ounces to buy 00:06:12.620 --> 00:06:15.220 one gold ounce, some analysts might see that 00:06:15.220 --> 00:06:17.740 as silver being potentially undervalued compared 00:06:17.740 --> 00:06:20.759 to gold. And if the ratio is low? Then the thinking 00:06:20.759 --> 00:06:22.939 might be the opposite, that gold looks relatively 00:06:22.939 --> 00:06:25.639 cheap compared to silver. Interesting. What's 00:06:25.639 --> 00:06:28.199 the historical norm for this ratio? The article 00:06:28.199 --> 00:06:30.939 mentions that since the 1970s, the average has 00:06:30.939 --> 00:06:35.139 hovered around 65 to 1. So 65 ounces of silver 00:06:35.139 --> 00:06:38.379 per ounce of gold. OK, 65 .1 is the benchmark. 00:06:38.519 --> 00:06:40.959 So where are we now or where have we been recently? 00:06:41.680 --> 00:06:44.579 Well, looking at that 2000 to 2024 period again, 00:06:44.939 --> 00:06:48.000 the average was higher, around 71 .9 to 1. A 00:06:48.000 --> 00:06:49.800 bit higher than the long term average? A bit 00:06:49.800 --> 00:06:53.199 higher, yeah. But what's really jumped out according 00:06:53.199 --> 00:06:56.079 to the source, is that since 2022, the ratio 00:06:56.079 --> 00:06:59.019 has stayed consistently above 80 to 1. Wow, 80 00:06:59.019 --> 00:07:01.220 to 1. That's quite a gap from the historical 00:07:01.220 --> 00:07:04.779 65 .1 average. It is. So the implication there, 00:07:05.000 --> 00:07:06.939 based on the historical pattern, is that silver 00:07:06.939 --> 00:07:09.339 might look relatively inexpensive compared to 00:07:09.339 --> 00:07:11.500 gold right now. That's certainly how many analysts 00:07:11.500 --> 00:07:13.620 interpret a ratio that's significantly above 00:07:13.620 --> 00:07:16.480 its long -term average. It suggests silver could 00:07:16.480 --> 00:07:18.259 be trading at a historical discount to gold. 00:07:18.410 --> 00:07:20.509 Fascinating tool. OK, wrapping things up, what 00:07:20.509 --> 00:07:22.529 does the source suggest about the future outlook? 00:07:23.050 --> 00:07:25.689 Well, for gold, the expectation seems to be continued 00:07:25.689 --> 00:07:28.310 importance as a core asset. Its price will likely 00:07:28.310 --> 00:07:30.569 keep responding to those big economic trends, 00:07:31.110 --> 00:07:34.089 central bank moves, global events. And the potential 00:07:34.089 --> 00:07:37.569 for inflation might keep demand solid. That's 00:07:37.569 --> 00:07:40.110 a key factor in mentioning acting as that inflation 00:07:40.110 --> 00:07:42.569 hedge. And for silver, it sounds like its future 00:07:42.569 --> 00:07:44.910 is really tied to that industrial side. Very 00:07:44.910 --> 00:07:48.000 much so. Its prospects seem heavily linked to 00:07:48.000 --> 00:07:50.920 how fast those silver -hungry industries grow. 00:07:51.279 --> 00:07:53.439 Technology, renewables, that sort of thing. The 00:07:53.439 --> 00:07:56.420 article even hints at potential big movers. It 00:07:56.420 --> 00:07:59.240 does, yeah. It mentions a potential stunning 00:07:59.240 --> 00:08:01.819 new tech development that could impact silver 00:08:01.819 --> 00:08:05.399 prices. And also notes some experts predict a 00:08:05.399 --> 00:08:09.860 20 percent surge for silver in 2025. So some 00:08:09.860 --> 00:08:12.100 bullish signals tied to that industrial growth. 00:08:12.339 --> 00:08:14.949 OK, so pulling it all together. Gold seems like 00:08:14.949 --> 00:08:17.589 the more stable traditional safe haven. Generally, 00:08:17.829 --> 00:08:20.529 yes. While silver offers maybe higher volatility, 00:08:20.670 --> 00:08:22.850 but also potential for quicker growth, especially 00:08:22.850 --> 00:08:25.089 if that industrial demand keeps climbing. That 00:08:25.089 --> 00:08:26.970 captures the essence, I think. And that gold 00:08:26.970 --> 00:08:29.430 -silver ratio being so high right now compared 00:08:29.430 --> 00:08:32.149 to history gives an interesting lens on their 00:08:32.149 --> 00:08:35.080 current valuation. It definitely does. It highlights 00:08:35.080 --> 00:08:38.559 that interplay, economic factors, global events, 00:08:39.299 --> 00:08:42.120 supply, demand. But with silver, you always have 00:08:42.120 --> 00:08:44.659 that extra industrial dimension really stirring 00:08:44.659 --> 00:08:47.080 the pot. This has been really clarifying, digging 00:08:47.080 --> 00:08:50.620 into the performance and the personalities of 00:08:50.620 --> 00:08:52.480 gold and silver. Glad it was helpful. It leaves 00:08:52.480 --> 00:08:54.500 you wondering, though, given those historical 00:08:54.500 --> 00:08:56.740 trends, the current high ratio, and all this 00:08:56.740 --> 00:08:59.100 talk about future industrial demand for silver, 00:08:59.840 --> 00:09:02.139 what would a significant shift back towards that 00:09:02.139 --> 00:09:04.899 long -term average ratio actually signal for 00:09:04.899 --> 00:09:07.960 investors looking at precious metals? Definitely 00:09:07.960 --> 00:09:09.779 something to ponder. Thanks for joining this 00:09:09.779 --> 00:09:10.220 deep dive.