With December Gold continuing to consolidate recent gains above $1500, investors have begun to move quickly into the cheaper safe-haven option of silver which has surged 12% this month and touched an over two-year high of $18.76 on Thursday. Unless there is a harsh selloff later today below $17.50 in “poor man’s gold”, the metal that most everyone has loved to hate since it broke down sharply in 2013 will technically join gold in a new bull market. If history is any guide, leadership and its outperformance in relation to the gold price should continue in silver for the precious metals rally to keep running.
Historically, the gold trend in either direction has driven the silver market. Investors typically ignore this tiny sector until gold has rallied long and high enough to convince them its upside momentum is sustainable. In fact, when this current secular bull market in gold began in early 2001, silver did not begin its major up-leg until late 2003.
We witnessed roughly the same significant bottom timing differential between gold and silver after the yellow metal made a major low in early 2016. Once the first leg of this secular bull market in gold peaked in late 2011, the safe-haven metal made a significant bottom in early 2016, while the silver bear market continued to frustrate investors by selling down to a final double bottom low in late 2018.