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Thursday
Apr212011

The Truly Remarkable Run of Silver

As gold continues to receive all the headlines, silver continues to look at the yellow metal in the rearview mirror. 

Below we highlight a few charts and tables that show just how remarkable the run for silver has been.  Had you invested $100 in silver ten years ago today, your investment would now be worth $1,037.  A $100 investment in gold would be worth about half that at $569, and a $100 investment in the stock market (S&P 500) would be worth -- wait for it -- $107.48. 

The two main silver ETFs (SLV and DBS) have gone absolutely parabolic over the past few weeks.  Both are currently trading more than two standard deviations above their 50-day moving averages, and just when they seem about as overbought as they can possibly get, they get even more overbought. 

We track nearly 200 ETFs in our daily ETF Trends report over at Bespoke Premium that cover every asset class out there.  Below is a list of the ETFs across all asset classes that are currently trading the farthest above their 50-day moving averages.  As shown, SLV is currently 26.24% above its 50-day, and the second most overbought ETF -- EWY -- is not even in the same time zone as SLV. 

And the outperformance of silver against all other asset classes has been going on for years now.  Below we highlight the rank in terms of performance of all the ETFs we track since the start of 2008, 2009, 2010, and year to date.  As shown, SLV has been the best performing of all the ETFs over all four time periods!  If we sum up the ranks over all four periods (the lower the better), the next closest sum behind SLV's 4 is XOP at 43.

Finally, below is a chart of the gold to silver ratio going back to 1975.  The ratio of gold to silver was over 80 just a little more than two years ago, but it is currently down to 32!  The ratio has dropped from 40 to 32 in the last month alone, with silver gaining 32% to gold's 6.5%.  Year to date, silver is already up 50%!  Prior to this month, the ratio had traded in a range between 40 and 100 over the last 25 years, but any precedent has been shredded to pieces here recently.  We all heard about the University of Texas taking delivery of $1 billion in gold this week, but maybe they should have chosen silver instead.  Who cares if it would fill Texas Memorial Stadium. 

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Reader Comments (1)

Word around the trading desk is its hard to borrow SLV etf. So might be hard to take advantage of the almost record Silver to gold ratio. Maybe have to do it through futures, but that introduces some contango and backwardation risks.

April 23, 2011 | Unregistered CommenterAnalysis

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