Gold is going much higher (actually, the dollar is diving much lower), but silver is going to outperform gold by multiples. Why?
For several reasons, the gold to silver ratio is going to trend back down toward the historical norms.
Gold is going to rise as the dollar falls. That’s a given.
But silver is going to rise MUCH faster and higher than gold.
Most of the analysts who study precious metals are missing a huge part of the picture, in my humble and inexpert opinion.
They correctly note reasons #1 and #2 below, but they totally miss the so-far unseen #3.
So what does conventional wisdom say is driving the price of silver upward?
1. Silver as the secondary monetary metal, behind gold. As the dollar falls, both will rise, obviously.
2. Silver as a metal needed in modern industry. You can’t build a missile, a jet or an EV car without silver. And unlike gold, when silver is used in this way, it’s gone, lowering the world supply. And you can’t just “open up a new silver mine” and start extracting more silver. This takes years, at great cost and effort.
Everybody acknowledges #1 and #2 in the current rise of the value of silver. But they are missing the third and forgotten leg of the stool. What is #3?
3. Silver as an everyday means of retail exchange. As the dollar collapses in value, more and more people will begin to use silver to make purchases. This will begin at farmers markets and swap meets. It will spread to other retail outlets which will accept silver, with its steady value, in lieu of dollars, as a hedge against inflation.
This won’t happen during the deflationary opening stage of a recession or depression. But when the government turns on the electronic printing presses to inflate its way out of its debt, and “pay” (wink wink) its obligations in worthless fiat dollars, then silver will really shine. People will begin to offer silver coins to make everyday purchases, and merchants will gladly take them.
As silver coins gain “market share” at the retail level, demand for silver coins will soar. Barter only goes so far before it gridlocks. Will you take a bunch of shirts to a swap meet, hoping to buy some meat, if the meat seller doesn’t need any shirts? Then what? Try to make a three way trade? Barter is always a necessary first step during a severe economic crisis, but barter always freezes up. This is why money exists.
And gold is much too valuable to use for small everyday purchases. A (rare) 1/10 ounce gold coin is worth $425 at today’s spot price.
The use of silver coins (junk silver and generic “silver rounds”) will begin slowly, but it will steadily increase, pushing the gold to silver ratio back toward the historical norm of 15-1. Today, with gold at $4,224/oz and silver at $57, the ratio is trending downward, currently it’s at 74 to 1.
And when inflation really kicks off, when an EBT card with a trillion dollars on it will only buy 3 eggs today, and supply chains break down and stores are looted, what will merchants with anything of value left to sell prefer? Hyperinflating fiat dollars, or silver and gold?
And consider that during this period, electronic payment systems (EBT and credit cards) may fail, worsening the outlook for anyone trying to buy with fiat dollars.
Gold will be for major purchases like land, houses, and vehicles. Silver will be for buying the everyday necessities. Food, gasoline etc. When and where you can find them.
In Zimbabwe and other nations that have experienced hyperinflation, a parallel economy using U.S. dollars and other “strong” currencies always develops.
But if the dollar itself collapses, what will be its backstop? All the analysts who talk and write about the end of the debt cycle and a possible collapse in the value of the dollar, speak about a theoretical transition to a “stable coin” or a CBDC economy. As if this bridge to the future will somehow just magically appear before us.
But I see a gaping chasm between the current dollar system and whatever is eventually going to replace it. I believe there will be a period like the year 2000 in Argentina, with bank closures and total chaos. During this period, for many people with foresight, silver coins will help to fill the gap. Eventually a new monetary system will emerge, but you will have to survive some very rough months or years before this comes about.
It’s just my opinion. You pays your money, and you takes your chances.
Bracken — Out.
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M.B. is one of the only people to recognize and to make clear that silver will work for everyday purchases and that it doesn't matter how it performs today vs stocks, bonds, Bitcoin, gold, real estate, pork bellies or anything else because when everything else is worthless, silver will buy you stuff you need. Gold may save your life but silver will get you by day by day and is much less susceptible to any threats of confiscation. Excellent article. Thanks
To restore the ratio of Dollars to Gold at the time of Bretton Woods it is now estimated we are looking at something like $25,000/oz. Robert Kyiosaki is calling for $100+ Silver in '26.
While there have been massive Silver deposits such as the Comstock Lode in Nevada, most Silver is recovered as a byproduct of mining other minerals.