Can Silver Rally Without Gold?

June 29, 2018

The article titled “Silver’s Critical Role In Electrification May Fuel Its Rise” contains some interesting comments about the silver market, but with one minor exception the information presented in this article has no bearing on silver’s risk/reward as a speculation or investment. The minor exception is the high (by historical standards) gold/silver ratio, which suggests that the silver price is likely to rise relative to the gold price over the next few years. However, none of the information about silver ‘fundamentals’ presented in the article is relevant to the silver price.

It isn’t relevant for the same reasons that most of the information presented by the ‘experts’ about gold fundamentals is also not relevant: It treats the annual output of the mining sector as if it were the total supply (annual mine production is a small fraction of the total supply) and it confuses flows from one part of the market to another with changes in total demand (every ‘flow’ involves an increase in demand on the part of the buyer and an exactly offsetting decrease in demand on the part of the seller). Furthermore, it isn’t relevant for another reason that can be illuminated by asking the question: within the past 80 years, when was there a major silver rally in the absence of a gold rally?

The answer is that over the past 80 years there hasn’t been a single major silver rally in the absence of a gold rally. The best rally in silver without a concurrent rally in gold was the 6-month price spike that began in Q3-1997. This rally resulted from an attempt to manipulate the price upward on the back of Warren Buffett’s silver accumulation; it did not result from any of the ‘fundamental’ drivers cited by commentators trying to make the case that silver can rally strongly without gold.

The historical record persuasively argues that large silver rallies don’t happen in the absence of large gold rallies. This tells us that either economic/financial-system confidence drives the silver market in the same way that it drives the gold market or that the big trends in silver simply follow the big trends in gold.

The bottom line is that there does not appear to be a good reason to expect the silver price to move substantially higher independently of the gold price.

Steve Saville graduated from the University of Western Australia in 1984 with a degree in electronic engineering and from 1984 until 1998 worked in the commercial construction industry as an engineer, a project manager and an operations manager.  In 1993, after studying the history of money, the nature of our present-day fiat monetary system and the role of banks in the creation of money,  Saville developed an interest in gold.  In August 1999 he launched The Speculative Investor (TSI) website. Steve Saville has  lived in Asia (Hong Kong, China and Malaysia) since 1995 and currently resides in Malaysian Borneo.  Visit his website at

Silver has the highest electrical conductivity and heat of all metals.