Why Is Silver Barely Going Up, Yet Gold Is Breaking Records?

From what I've read, not everyone considers silver a form of currency like gold is. The reason gold is soaring is people are trying to protect their assets as the euro tanks. Silver is on the line between a precious metal and an industrial metal so it's definitely not the first thing people run to. I think you'll see silver creep up gradually as investors diversify their holdings and switch some from gold to silver.

According to Kitco's technical charts, gold is looking way over bought and has some potential for a correction. While silver is only minimally overbought.

Yeah silver has went from a low of say a recent $33.80 to $40.56 pretty fast, and a bit under the radar as gold has been setting records....

I can buy that hybrid silver theory Gilpo....

Silver is a much smaller market than gold, so it tends to be much more volatile. Silver has moved up from about $33 to $40 in the past 10 days. That's about a 21% change. If gold had moved up that strongly in the past 10 days, it would be closer to $1800 than $1600.

The nice thing about silver is that it is a stealth PM. It lurks in the shadow of its big brother, gold. It is volatile but it is also affordable. Most anyone can afford an oz. or two of silver. Not so with gold. Also, fractional gold tends to have very high premiums. Check out the per oz. prices on those 1-5 gram gold bars sometime. Silver premiums are much lower, mostly because the silver price itself is a lot lower than gold.

One very real problem for PMs these days is that there is MUCH more paper gold and paper silver around than physical. These are the ETFs, derivatives, futures, etc. These are the tail that wags the dog at times. Most of this paper PM trade is by people who do not desire to ever take delivery of any PMs, they just want to profit on the price moves that PMs have. Most of these instruments state in their prospectus that all contracts will be settled in US dollars, EU Euros, or British pounds... and not in the metal itself.

Another problem is the shorting of PMs. Those who take short positions borrow something, sell it, and then pay back the loan later, hopefully at a lower price. With stocks, they pay back their loans with actual shares. Unfortunately, PMs can be shorted without anyone ever taking physical PM delivery or paying back the short positions with any PM at all. They pay back with currency.

Some say that the big bullion banks have manipulated the PM markets with their shorting behavior. I can't say that they do but it would not surprise me if they did. People have been trying to "game the system" ever since the system came out.

Then, we had the COMEX coming out with their increases in the reserves of the silver futures contracts. They did 4 or 5 of these in rapid succession, which made each futures contract quite a bit more expensive. This squeezed out a lot of the silver buyers (speculators) and dumped the price by around 33%. That did give us a great place to buy in, though, so I can't be too mad at them about that.