Why Silver will be a Better Investment than Gold
(And Both are Better than Dollars)
Silver Stock Report
by Jason Hommel, November 17th, 2009

Recently many of my readers have been asking, “Why is silver lagging gold?”

After all, in March, 2008, gold hit $1020, and silver exceeded $20, yet here we are now, with gold now above $1145, and silver at $18.33, not even at $19!

The really funny thing is the way the popular media spin the price relations.

When silver underperforms gold, they say, “Silver is not confirming gold’s rise, therefore, gold prices are due for a fall.”

And when silver outperforms gold, they say, “Silver is exceeding gold’s rise, therefore, this bull run is overdone, and thus, gold prices are due for a fall.”

In other words, we have a manipulated market. Not only is the price manipulated, but so is the news coverage!

Of course, the media could give opinions the other way, and say, “With silver lagging gold, it shows that gold has much further to run, and also silver is due to catch up and exceed gold’s pace, thus making silver the much better buy now.” Or, after silver outperforms, they could say, “Silver’s outperformance has confirmed everything the silver bulls have been saying for the last ten years.” But they never do that, do they?!

As it is, the price ratio changed from 64 on Friday to 62 on Monday, so silver far outperformed gold on Nov. 16th.

Gold moved from $1118.50 on Friday to $1139.80, a rise of $21.3/oz., or a 1.9% increase.
Silver moved from $17.42 on Friday to $18.40, a rise of $.98/oz., or 5.6% increase.

Silver sure didn’t lag behind gold on that day!

So, is all news that is bearish on silver evidence of “manipulation?” Of course not. Some commentators are not colluding on purpose, they are simply willfully ignorant.

For example, here is an independent Christian newsletter writer named Gary North who writes:
Why Silver Is a Poorer Investment Than Gold (Nov. 14th)
http://www.garynorth.com/public/5700print.cfm

You’d think he could have timed his article better. He published on Nov. 14th, and was proven wrong in less than 48 hours!

Nearly everything Gary writes in that article is not really the whole truth. I’m shocked to read his take on silver. After all, he has written perhaps the most thorough economic commentary on the Bible that exists (very long, quite good, but could use a bit of improvement).
http://www.garynorth.com/public/department57.cfm

So I don’t think he’s an agent of the banks, so I think it must be ignorance that is distorting his judgment, or perhaps his age. I’ve tried to answer his questions on silver over the years, but he has not replied with reason, but rather with emotion, so there must be something more at work here, but I don’t know what it could be. He wrote last year:

Jason Hommel Tells Me Off: I Do Not Understand Commodities, Silver, and Especially the Bible. He Demands That I Answer Him.
http://www.garynorth.com/public/4002.cfm

So, this and his other essays go to show he is not unfamiliar with my work, but rather, he has some sort of emotional rage against it. This is why I cannot excuse Gary as simply being ignorant of the statistics that he mocks, but rather, he is willingly ignorant.

But that’s in the past. I want to refute his recent article, and get to the recent ten year relative performance of silver vs. gold. All we need is a gold/silver ratio price chart.

A quick search on google reveals a source. I trust gold-eagle.com: Here it is:
http://www.gold-eagle.com/charts/gegsr.html

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