Thursday , 25 July 2024

Silver: Current Risk Not Worth the Upside Potential – Here’s Why

Gold has taken it on the chin of late…falling 25% since hitting an all-time high of 10 Ounce Silver Bullion Bars$1,900 an ounce in September 2011. It’s down 15% this year alone but I still have faith in gold… I think gold will remain a reliable safe haven for the foreseeable future which should thus prevent prices from heading below $1,000 an ounce as some analysts are predicting. I don’t have the same confidence in silver. [Let me explain why.]

So says Ian Wyatt ( in edited excerpts from his original article* entitled The One Precious Metal You Should Sell Immediately.

[The following article is presented by  Lorimer Wilson, editor of and and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Wyatt goes on to say in further edited excerpts:

Silver is a far more volatile than gold

While gold prices rose steadily from late 2008 – at the depths of the U.S. recession – through September 2011, silver prices were all over the map. For the first couple of years, silver rose at an even faster pace than gold, vaulting from roughly $9 an ounce in October 2008 to $49 an ounce in April 2011. Since then, however, silver has been extremely volatile. Just look at the rollercoaster ride the metal has been on the last two years [in the chart below] – 9 fluctuations of 17% or more in a matter of two years vs. only two fluctuations of 17% or more during that span for gold.

Silver Spot Prices Since May 2011


Consequently, while both metals have been on a downward spiral of late, silver has fallen much further on a percentage basis than gold. While gold has fallen 25% in 20 months, silver prices have fallen 47% during that time. Beta is a measure of the volatility, or systematic risk, of a security in comparison to the market as a whole. The higher the beta, the riskier the stock. SPDR Gold Trust (NYSE: GLD) ETF has a beta of 0.16. The iShares Silver Trust (NYSE: SLV) has a beta of 0.74.

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Silver is less predictable than gold

True, silver rose faster than gold when both metals were thriving after the recession but, as investors have sold off their metals over the past two years, silver has declined 50% faster than gold. Simply put, silver is less predictable than gold. Its ups and downs are far more pronounced than gold’s and occur with greater regularity and its declines are far more damaging. That unpredictability makes silver no longer worth the risk…

As indebted countries all over the globe continue to print money, gold will remain a safe haven that functions as a hedge against declining currencies. Silver hasn’t proven to be nearly as dependable and, while the upside potential may be enticing to some, in my mind that reward isn’t worth the considerable risk.

[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]

* (©2013 Wyatt Investment Research & Business Financial Publishing LLC)

Related Articles:

1. 4 Specific Reasons Why Owning Gold Still Matters


I’m not going to predict a speedy recovery for gold prices. That said, I continue to believe that gold offers investors safety in an uncertain world and, while I remain optimistic about the recovery of the U.S. economy and stellar financial performance of some companies, there is reason for concern on a global level. That’s why I think every investor…must own gold. Read More »

2. Gold Bugs: Look Out Below! Gold Could Drop to $1,000


Gold bugs: look out below! There are undoubtedly a lot of speculative purchases that may need to be unwound in coming years. I think gold could fall to $1000 or even less as it realigns with other commodity prices. Words: 865; Charts: 4 Read More »

One comment

  1. If you don’t think that PM’s are now being manipulated by the Central Banks, then I agree that you should not be investing in PM’s!
    If you believe that printing paper money cannot go on forever then what is happening now is nothing but a huge buying opportunity!

    My gut feeling is that when the PM “reversal” happens, it will be so extreme that most small investors will not be able to jump on-board before the prices have skyrocketed relative to where they are currently, due to the market dynamics that favor the really big investors.

    Here is a great PM question for you, Are the Central Banks still buying Gold, and if so why?
    I look forward to your comments!