Silver prices just made their biggest weekly advance since the 2008 collapse of Lehman Brothers, but the run-up has been largely eclipsed by smaller gains in gold prices.
Continue Reading Below
The less-valuable metal climbed 20 percent over the past week to $23 an ounce, an increase of more than 94 percent from its bottom below $12 in March and a run-up of 28 percent so far this year.
“With relatively flat positioning, silver stands out as a catch-up trade,” wrote Paul Ciana, technical strategist at Bank of America.
He pointed to silver forming a “big base” while trading sideways over the past five years and thinks the metal is poised to “catch up” to the longer-term performance of gold and the S&P 500, which have both booked record highs in 2020.
For now, silver is still trading 50 percent below its 2008 financial crisis peak of $46.08. The precious metal reached an all-time high of $48.70 when the Hunt brothers attempted to corner the market in January 1980.
“Silver is commonly looked at as the poor man's gold,” said Ed Moy, chief strategist at gold retailer Valaurum and head of the U.S. Mint from 2006 to 2011.
Pricier to start with, gold has rallied just 28 percent off its March low to $1,900 and has risen 24 percent year-to-date.
The precious metal is currently valued at more than 82 times the price of silver. The ratio has averaged 64.48 since 1980, falling as low as 14.81 and climbing as high as 125.89, according to Dow Jones Market Data.
That number will narrow if Ciana’s technical analysis of the charts proves correct. He sees silver targeting $26.22, $30.73 and possibly even $35.23 an ounce, or 53 percent above current prices.
Ciana also projects gold will reach a high of $2,296 an ounce, or 21 percent above its current level.
“When gold goes up $10, yes you can make good money on it,” Moy said. “When silver goes up $10, you can make a lot of money.”