Brien Lundin: Silver will Outperform Gold for the Next Few Years

TL;DR

Silver's performance is influenced by geopolitical events and liquidity events, which led to a historic high in the silver-gold ratio. Despite short-term fluctuations, silver is expected to outperform gold in a longer-term monetary bull market.

Transcript

I'm Georgia Williams with the investing news network and joining me today is Brian London editor of the gold newsletter and CEO of the New Orleans investment conference good morning Brian good morning nice to be with you it's nice to see you today um at your presentation yesterday you said that if you like worlds you should love silver right but th... Read More

Key Insights

• 🥈 The silver-gold ratio can fluctuate due to geopolitical events and liquidity events, which affect the perceived industrial demand for silver.
• 🤘 Silver's value as a monetary metal outweighs its industrial demand, especially during longer-term monetary bull markets.
• ☠️ Lowering interest rates by central banks may have more of a psychological impact on markets than an economic one.
• 😄 The coronavirus outbreak has brought forward central bank easing and stimulus measures, which can increase uncertainty and perception, impacting gold and other precious metals.
• 🍉 Investors can take advantage of market blips by considering silver and gold as long-term investments during periods of economic uncertainty.
• 😘 The large sovereign debts in the Western world may lead to continued low or negative real interest rates, creating a favorable environment for higher gold and silver prices.
• 🛀 Buying opportunities arise during sustained uptrends in gold and silver prices, as historical patterns have shown.

Questions & Answers

Q: Why did the silver-gold ratio reach historic highs recently?

When gold moves violently in either direction, silver doesn't mirror that move on the upside due to geopolitical events. During liquidity events, such as a possible economic slowdown, silver is sold more because of its perceived industrial demand.

Q: Is silver primarily used for industrial purposes?

Silver is primarily a byproduct metal, but it does have industrial demand, including its usage in solar panels. However, its price is mostly driven by investment demand as a monetary metal.

Q: Will central banks lowering interest rates have a significant economic effect?

The economic effect of lowering interest rates will likely be minimal, as rates are already low. However, it will have a psychological impact on markets, as markets have become dependent on low interest rates and easy money.

Q: How will the coronavirus impact gold and other precious metals?

The coronavirus has expedited central bank stimulus measures and brought forward the wave of easing. While the actual impact may not be significant, the perception of uncertainty can have a psychological effect on gold and other precious metals.

Summary & Key Takeaways

• Silver's value as a monetary metal is more significant than its industrial demand, but during periods of economic uncertainty, its industrial demand can affect its price.

• The silver-gold ratio reached historic highs due to silver being hit harder during a liquidity crunch, where it was perceived as having industrial demand.

• Lowering interest rates by central banks, including the Federal Reserve, may have a psychological impact on markets rather than an economic one.

• The coronavirus outbreak has expedited central bank easing and stimulus measures, which is expected to be impactful for gold due to increased uncertainty and perception.