Don't Sleep On Silver

If you ask for my opinion, it's not a question of if silver gets to triple digits, it's just a question of when.

I’m always keeping an eye on gold - my favorite investment for nearly a decade now - as my readers have known for years. But also, let’s not forget silver: it’s the “gold” for the retail investor and for the mom & pop. I think silver’s next run higher will be its best in history, fueled by more retail exposure now than ever, and a favorable gold-to-silver ratio.

As a primer, retail investors favor silver over gold primarily due to its affordability, growth potential, industrial demand, and perceived market suppression.

Silver is significantly cheaper than gold, allowing smaller investors to accumulate more without a large financial commitment. This makes it easier to trade in smaller increments, making it a practical choice for those looking to gradually build wealth.

Silver also tends to be more volatile, meaning it has greater potential for short-term gains compared to gold. While this comes with increased risk, many investors see this price movement as an opportunity.

Overall, silver is attractive to retail investors because it is more accessible, has industrial backing, offers higher price swings, and is seen as a challenge to Wall Street’s control over commodities. While gold remains the traditional safe haven, silver is often viewed as the more dynamic and potentially undervalued alternative.

Silver was also the target of retail several years ago, and so has renewed focus on it in ways that it didn’t in years prior. Remember - the Silver Squeeze of early 2021 was a retail investor-driven attempt, largely fueled by Reddit’s WallStreetBets (WSB), to push silver prices higher by mass-buying silver, ETFs like SLV, and mining stocks.

Inspired by the GameStop short squeeze, traders believed major banks were suppressing silver prices and aimed to trigger a short squeeze.

Silver briefly surged nearly 10% to an eight-year high, but unlike GameStop, the market was too large for retail investors to control. Some WSB members then distanced themselves, suspecting institutional interests were pushing the silver narrative as a distraction.

Despite short-lived gains, the Silver Squeeze highlighted retail investors’ growing influence and it’ll keep silver in people’s memory and on their minds moreso on its next major bull run than it ever has been.

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With that in mind, my friend and favorite economist Peter Schiff over at Schiffgold makes the case as to why the gold-to-silver ratio is now, once again, worth paying attention to.

Gold-Silver Ratio: Silver Breakout Incoming?

Gold has reached new all-time highs, and the gold-to-silver ratio now exceeds 90:1. Such a high ratio has often signaled an impending breakout for silver prices. It indicates that silver could be undervalued, and we may be on the verge of a major price surge. Sometimes, if you miss a price run-up for gold, you can make up for it by buying silver instead as it catches up to its yellow cousin.

With gold trading at $2,940 and silver still down at $32.22, the gold-to-silver ratio is over 90 to 1. Since gold is highly likely to continue rising, an explosive catch-up move in silver is likely soon. So if you think you missed the boat on gold, just buy some silver instead.

— Peter Schiff (@PeterSchiff) February 11, 2025

The gold-to-silver ratio measures how many ounces of silver it takes to buy one ounce of gold. Over the past century, this ratio has typically ranged between 40:1 and 70:1. When it rises above 80:1, silver has often experienced sharp upward movements in price. Currently, with gold soaring past previous highs and silver lagging behind, the imbalance suggests that silver could be due for a strong rally.

That’s especially true as gold is unlikely to be done with its trend of hitting all-time highs this year, and may surge further into the stratosphere. Now silver is edging back up—are we about to witness an epic breakout?

Gold-Silver Ratio, 1-Week

History shows that extreme gold-to-silver ratios have frequently preceded silver bull runs. For example:

• 1991: The ratio spiked to nearly 100:1 before silver surged by over 50% in the following years.

• 2003: The ratio stood at 80:1 before silver began a multi-year rally, climbing from $4.50 per ounce to over $20 by 2008.

• 2008-2011: After the financial crisis, the ratio hit about 83:1, and silver rocketed from $9 per ounce to nearly $50 by 2011.

• 2020: The ratio briefly exceeded an incredible 120:1 during the pandemic market crash, but silver rebounded from $12 to over $28 within months.

Each of these instances followed a pattern: when the ratio climbed to extreme levels, silver eventually outperformed gold in percentage terms as it caught up, even though gold tends to outperform silver in the longer-run.

Several factors support the case for a silver breakout. The first is monetary policy and inflation. Even as Jerome Powell announces a pause to rate cuts to tamper down inflation, the money supply finds a way to expand. When central banks continue to print money, it fuels inflation and increasing demand for hard assets. Gold’s rally suggests that investors are seeking protection against devaluation, and silver, historically a store of value, tends to follow gold’s lead with higher volatility.

Industrial demand for silver is also widespread. Silver’s role extends beyond investment; it is a key component in solar panels, electronics, and electric vehicles. With the global push toward green energy, demand for silver in industrial applications is rising. The Silver Institute forecasts industrial silver demand to remain buoyed by growing industrial need in the coming years, with 2025 marking the fifth consecutive year of demand outpacing supply even as it declines for jewelry and other uses.

Unlike gold, much of the silver mined is consumed in industrial processes, making above-ground supplies more limited. Primary silver mines are scarce, and supply chains have faced disruptions in recent years. Silver also remains historically undervalued compared to gold. As more investors recognize this discrepancy, demand for silver could surge, driving prices higher.

Silver vs USD 1-Month

If history repeats itself, a breakout in silver could happen swiftly. When silver moves, it often does so aggressively. In past rallies, it has outpaced gold’s gains on a percentage basis, rewarding investors who positioned themselves early.

Buy this morning’s dip in silver, back below $32. One day, silver will trade below $32 for the last time. It’s possible that day is today.

— Peter Schiff (@PeterSchiff) February 11, 2025

With gold reaching new highs and the gold-to-silver ratio at extreme levels, conditions appear ripe for silver to follow suit. After all, gold isn’t all that glitters — keep an eye on silver in the coming months as investors watch Trump tariffs, Fed decisions, and the state of multiple global conflicts in Gaza and Ukraine as the Trump administration enters full swing.

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