Any day now, the market price for gold bullion will cross the $3000/ounce mark.
It will be a huge milestone and a first in history, and though $3000 is just another number, the psychological effect on the market will likely push prices even higher.
The thing is, it actually won’t be a first in history.
Though $3000/ounce is a price never yet achieved by the world’s most sought-after precious metal (gold was trading at $2940/ounce as of yesterday afternoon), when adjusting for inflation and looking into relatively recent history, prices have crossed that milestone and flown beyond.
45 years ago, in January of 1980, gold hit $850/ounce — or about $3470 in today’s money.
Gold Fever Is Called A 'Fever' For A Reason
What happened after that was the stuff of legend and remains a cautionary tale for gold miners and investors all over the world.
Within 15 months of these all-time highs, gold was down by more than half, trading at just $300.
For the next 20 years it never broke $500, spending the balance of those two decades at or around $300/ounce.
Anybody owning it as a hedge against inflation would have lost and lost big.
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It wasn’t until 2007 that gold prices reached and exceeded that magical $850/ounce number, and when adjusting for inflation, those prices have never been touched since.
Gold’s resurgence wasn’t long-lived, either. The bubble popped again in the early 2010s, as its popularity peaked after the great Recession.
Trading for $1700/ounce in 2011, it was down to $1000/ounce by 2016. It was then and only then that the ascent to today’s highs began.
A Hedge For A Hedge
The point of all this is that even gold, history’s most reliable hedge, is not immune to bubbles.
The culprit is what the culprit always is — human psychology. When gold prices rally, they really rally, and we’re seeing the same thing start to take hold right now.
Everyone’s got the bug again, an effect compounded by the political instability trending today.
Eventually, we will see a collapse again, and the ensuing depression will be just as profound as the exuberance is today.
So if gold is approaching instability, what’s left? What’s the hedge to the world’s oldest hedge?
The answer is silver.
It tends to be overshadowed but the yellow metal, and as a result, silver prices have been relatively stable over the last 50 years — with one notable spike in 1980 caused by intentional market tampering by oil barons, Nelson Bunker and William Herbert Hunt.
Silver's Calm Rise
Silver hit $50–$204 in today’s money — just as gold was hitting $850.
The next time it came anywhere near $50 was in the early 2010s, right alongside gold when prices hit $40.
Today, silver trades at around $30, which adjusted for inflation, is right around its average price since the turn of the 21st century.
Gold, however, in its dramatic ups and downs, has taken on more of a rock-star aura.
The contrast between the two is most evident when viewing the gold-to-silver price ratio, which for millennia has averaged around 50-to-1.
Today that ratio stands at 100-to-1.
The conclusion is pretty self evident: silver is either highly undervalued, or gold is highly overvalued.
Don't Follow the Crowd. Follow History
In either scenario, any prospective gold investors are well advised to look to silver as an alternative, because even if it doesn’t bring 2x returns in the next 18 months, it will certainly insulate you from any losses the gold market may suffer.
And keep in mind, silver isn’t just a pretty metal for jewelry and flatware. Almost 60% of today’s demand comes from the tech and industrial sectors, where it’s heavily implemented in the production of a laundry list of products and components, including: circuit boards, thermal-shields, RF components, LEDs, semi-conductors, batteries, bearings and coatings, solar panels and a wide range of biotech applications.
That means the silver supply is shrinking at an ever-accelerating rate.
And yet, silver market price remains where it is, and the gold-to-silver price ratio remains where it is: Completely out of balance.
Not All Silver Investments Are Equal
Once the decision to invest in silver is made, another decision remains: What's the best way?
From bullion to multi-billion dollar miners to junior explorers, there are a lot of options. But one of the most prospective ways to get silver exposure today comes from a company with a unique technology for sourcing the metal.
This firm is a tech company, not a miner, and its extraction technology allows silver to be recovered from sources nobody else can touch.
Those sources hold more than $7B worth of silver, along with several other highly-valued elements.As of this morning, the company coming for it is valued at around 1% of that.
The potential here is enormous and with silver now a shrinking resource, the time has never been better.
Check out the full story, right here.
Fortune favors the bold,
Alex Koyfman
Check us out on YouTube!His flagship service, Microcap Insider, provides market-beating insights into some of the fastest moving, highest profit-potential companies available for public trading on the U.S. and Canadian exchanges. With more than 5 years of track record to back it up, Microcap Insider is the choice for the growth-minded investor. Alex contributes his thoughts and insights regularly to Energy and Capital. To learn more about Alex, click here.
