Gold gets the glory. It's what everyone thinks about when they hear "precious metals."
But does gold deserve this top spot? More specifically, does it deserve it right now?
History proves gold can be a store of value, a currency for trade, a flashy kind of jewelry, and a last resort when a crisis unfolds. It's darn important to how our economy functions... But it's not the only precious metal out there.
We've written a lot recently about the opportunity in gold. But other precious metals are primed to rise as well.
In fact, based on history, gold could actually underperform another precious metal this year.
Let me explain...
Gold and silver serve different purposes. Silver is a great conductor, so it has real industrial uses. Gold is mostly used in jewelry.
Still, both have use as a store of value. And that means that over time, we should expect the price of gold and silver to stay somewhat in line with each other.
We can check on this relationship with the gold-to-silver ratio. When the price gap between gold and silver widens, this ratio moves higher. And when the spread between gold and silver gets tighter, the ratio falls.
It's a simple way to know when gold trades at a high premium to silver. And it's where today's opportunity comes from.
Today, gold trades for the highest premium to silver since 1993. The premium has only been this high a few other times since 1980. You can see it in the chart below...
The recent gold rally pushed this premium near record levels. The ratio of gold to silver is drastically stretched.
Silver is at a multidecade low compared to the price of gold today. And that means that while gold should do well, silver will do even better...
We've seen similar instances in 1993, 2003, and late 2008. Each time led to two things... a gold rally, and major outperformance in silver. Take a look...
Silver rallied 50% from February 1993 to February 1994... an incredible one-year run. And it crushed gold in the process.
The two other instances tell the same story. Silver jumped 27% and 82%, respectively. And gold prices lagged... moving just 14% and 44%, respectively.
It's worth noting that gold also performed well in all three cases. So while silver could be the biggest winner, we have no reason to worry about gold, either.
I expect both metals to have a solid 2019. And silver – at its cheapest level compared to gold in nearly three decades – is poised for the biggest gains.
Most folks don't want to think about silver. Gold gets all the glory in the precious metals universe. But ignoring silver would be a big mistake right now.
History says we could see major outperformance in silver this year. I urge you to check it out now.
Good investing,
Brett Eversole
Further Reading
"One of the best ways to make incredible profits as an investor is to own high-quality gold companies when the metal is trending higher," Steve writes. While silver is likely to outperform gold, investors can take advantage of gold's move higher with one specific company. Get the details right here.
"This forgotten corner of the market is setting up to be a major winner in 2019," Brett says. Learn more about why a recent extreme move in silver also bodes well for the metal here: A 'Silent Boom' Is Starting Outside the Stock Market.
Precious metals like gold and silver are on the rise. And this gold miner could be a major winner as the uptrend continues...
A NEW BREAKOUT FOR THE CHIPMAKER THAT POWERS YOUR IPHONE
Today, we're checking in on a huge technological trend...
Regular readers know we're always on the lookout for big secular trends to invest in. And right now, the trend in electronics is undoubtedly one of the biggest we've seen. Smartphones, tablets, and computers continue to be a huge part of our everyday lives. And they all rely on little devices called semiconductors...
Broadcom (AVGO) is a $112 billion semiconductor maker. It makes the chips that power your favorite electronic devices, including digital and analog components – and it even boasts Apple (AAPL) as a client. Having the largest consumer-electronics maker in the world rely on your semiconductors is great for revenue... In its 2018 fiscal year, Broadcom reported sales of $20.8 billion, an 18% increase from its 2017 fiscal year.
As you can see in today's chart, AVGO shares are moving higher. The stock is up almost 40% from its July lows, and it recently hit a new all-time high. As long as today's technology continues to rely on semiconductors, this company will succeed...
