by Craig R. Smith, Swiss America Chairman
Gold's impressive 20% rally in recent months is now spreading to other precious metals, especially silver. What should these rising prices be telling you? After seven years of trading in a tight range, metals have now broken the technical barrier and are ready to continue the climb.
Why? Rising geopolitical concerns in China and the Middle East, the Federal Reserve’s decision to accommodate the financial markets by lowering interest rates and massive gold buying by central banks worldwide have all sent investors, big and small, running for the cover of precious metals this year.
Owning physical gold and silver as “wealth insurance” is the bedrock of a well diversified portfolio. Along with providing needed portfolio safety, precious metals have also quietly outperformed every other major asset class for almost 20 years; including stocks, bonds and real estate!
During the latest gold bull market (2002-2011), it took over 3 years for gold prices to rise $200/oz. But starting this June, gold prices rose over $200 – to above $1,500/oz. in just ten weeks! At this pace gold prices could exceed their previous 2011 high of $1,800/oz. by the end of 2019!
Most precious metal analysts agree this is a confirmation of the beginning stage of an explosive new precious metals bull market, which is likely to take both gold and silver prices to fresh historic highs.
In August, I issued a Special Alert to Swiss America clients about an excellent opportunity to increase their metal holdings based on the historic gold-to-silver ratio; which is the established relationship between gold and silver prices over thousands of years.
During the Middle Ages, silver and gold were interchangeable at an average ratio of 15 ounces of silver to 1 ounce of gold. This 15-to-1 ratio, which reflects the average natural occurrence of silver to gold mined from the earth, also became the official ratio established in the U.S. Coinage Act of 1792.
In July 2019, it appears the gold-to-silver ratio may have peaked at an extreme high of 93-to-1. As of early September the gold-to-silver ratio had fallen to 79-to-1. It may be in the process of correcting back toward the 40-year historical average (near 45-to-1). This may present a major buying opportunity in both gold and silver, as well as for those seeking the safety of establishing a Precious Metals IRA.
Studies of the gold-to-silver ratio indicate that once the ratio peaks, a sizable movement in both gold and silver prices usually takes place. For example, at the height of the latest bull market in 2011, silver prices touched $50/oz., representing a gold-to-silver ratio near 30-to-1.
During the previous major precious metal bull market (1976-1980) silver prices also topped $50/oz., with a gold-to-silver ratio near 15-to-1. A simple return to these historic gold-to-silver ratio norms could send silver prices rocketing.
Now is the time to take action, before prices run any further. Price dips present an excellent buying opportunity. To learn more about the gold-to-silver ratio, please call Swiss America at 800-289-2646 and request our Special Alert. Don’t wait to buy gold and silver, buy gold and silver and wait!
