Dec 28, 2023

Silver prices have continued to underperform, while gold prices have been surging in 2023.


XAGUSD – Weekly Chart

Silver’s all-time high is near the $50 set in 2011. The price is still 50% away from that high, and the first resistance is at the $26 level.

Gold prices continued to soar in 2023, with the current $2,080 price above the $1,921 high in 2011.

From the pandemic to Ukraine and Gaza, gold prices have risen as geopolitical events have stressed global markets. Alongside that, Western governments continue on their unsustainable debt and spending path. With that dynamic, fast-growing nations such as China and India have been stocking up on their supply of gold, buying record levels in 2022 and another buying boom in 2023.

The trend is also moving down to retail buyers, with the Costco supermarket in the US saying it sold $100 million worth of gold bars in the recent quarter. Some investors were worried about the potential for runaway inflation. The potential of central bank interest rate cuts is now boosting gold.

But the key reason silver underperforms is that gold is seen as the first-mover due to smart money, such as hedge funds or investment funds, stocking up in the early stages of stress. Silver is more of a retail buyer’s commodity in coins and smaller weighted bars.

Silver would catch up to gold if there were a rush to acquire precious metals in a debt-driven event with governments. The United States debt levels and the constant debt-ceiling arguments indicate that the day may come when silver goes on a big price run.

Metal will also continue to be necessary for electric vehicles and solar power, among other industries. If gold continues to push higher, silver can break above its early resistance in the year ahead. A more serious financial event could see it returning to all-time highs.

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