Why is Silver Coming Out of Gold's Shadow?
Related to gold is silver miners. Obviously, you can't talk about gold without talking about silver. Over the last several years, I think many in the market have been waiting for this catch-up trade to happen in silver, and we're actually starting to see that now. Physical silver has outperformed physical gold by about 50% year to date, so very strong performance that we're seeing out of silver.
It's also a little bit more unique than what we see out of gold, where gold is that precious metals allocation. Silver is kind of a dual metal where it has not only precious metals allocation, but also about 60% of demand is actually coming from industrial uses, and it's mined differently. Most miners aren't going out and mining silver specifically; it's a byproduct in many cases.
With these different characteristics, how should investors be thinking about allocations to silver and silver miners in relation to their overall portfolio? Silver is a really fascinating metal today because when you think about the history of gold and silver together, most advisers would talk about the gold to silver ratio: How many ounces of silver do I have to have to buy an ounce of gold? That was always kind of in lockstep with each other.
Silver's really stepping out of gold's shadow today. Gold is still truly a monetary metal, where silver, as you mentioned, is going from being maybe a lesser monetary metal to a true industrial metal. It's getting consumed, and yes, it's still a precious metal, but more and more of its consumption is going on the industrial side of things.
So, in many cases, advisers who are looking at precious metals for the first time, they're able to embrace the silver story a little more than they can or are willing to embrace the gold story. The one knock I hear all the time from advisers about gold is it doesn't do anything. It doesn't pay a dividend. It doesn't have a purpose outside of backstopping maybe paper currencies and so forth. Well, this move of silver stepping out of gold's shadow and going into the industrial application side, advisers can get their mind around that and say, "Okay, I see the purpose behind silver. I can convey that to my clients. We understand how that works and how that looks."
When you're starting to see the bid for silver get higher and higher, and as you mentioned, it's over $60 an ounce today. It's doubled what gold has done year-to-date from a performance pattern standpoint. We think that's going to continue as the easy stuff's largely been had. It's being consumed at a higher rate, and things like solar panels and camera technologies and all the other things that silver is being used for is continuing to grow. We really like the silver story.
