Gold's 'Ugly Sister' Gets a Second Look

MarketWatch ^ | May 15, 2010 | Myra Saefong

[Diana in Wisconsin]

TOKYO - Investors are finally giving gold's "ugly sister" a second look.

Silver's gains in recent months have significantly outpaced gold's, with silver climbing around 30% since early February, compared with gold's nearly 17% price gain.

And some analysts say silver hasn't yet caught the attention it deserves.

Investors "are not taking notice yet it looks like the world is far more focusing on gold," said Gijsbert Groenewegen, a managing partner at Silver Arrow Capital Management.

That's fair to say given that silver's more than two-year high above $19 pales in comparison to gold's highest-ever settlement price of more than $1,243 an ounce in New York for its most-active futures contract.

*SNIP*

"While silver has outperformed gold in recent months, it has massively underperformed gold over the long term," said Mark O'Byrne, a director at GoldCore, an international bullion dealer.

Gold's nearly 50% above its nominal high in 1980 of $850, while silver remains at less than 60% of its 1980 high of around $50, he said.

"Investors continue to view silver as gold's ugly sister," he said.

There has been no talk of pension funds, high net worth individuals, or large hedge funds investing in silver as of yet, O'Byrne said. "This will change in the coming months, and this is when silver is likely to really move up in price."

*SNIP*

"Silver is 'poor man's gold' and will ride on the coattails of gold, but gold is the true hedge against the demise of fiat currency," said Mark Leibovit, chief market strategist for VRTrader.com.

Even so, it's silver that's poised to garner the attention in the months and years to come.

[jiggyboy]

Goldbug ping

Looks like we’re going to have to go through another fight to get above $19.

Mail me to get on or off the Free Republic Goldbug Ping List.

[jiggyboy]

Google “gold silver ratio” for that kind of graph and a lot of commentary on what people think the ration “should” be.

[jiggyboy]

oops sorry about the double ping folks

[Christian_Capitalist]

Looks like we’re going to have to go through another fight to get above $19.

Gosh, I hope so. I'd love to see SLV fall down to its 50-DMA at $17.50 or even its 200-DMA at $16.70. I'd like another chance to buy before it clears $19.

JMHO.

[C19fan]

Thanks for the heads up. Looks like there is no long run “natural ratio” since 1970. Considering back in the mid-late 19th century the ratio was I believe 16-to-1 silver has lost a lot of purchasing power relative to gold in the 20th century.