A couple of charts:
Of the 2 monetary metals, gold is a cleaner chart, mostly because there have been and continue to be, major purchases from the CBs. Silver is far more volatile and at current valuations is the cheaper of the 2.
Gold is probably going to break higher in 2022. It has simply been correcting through time.
As compared to silver:
Whose valuation to gold, is very low. Historically, on average, it's as cheap as it gets.
I hold a significant amount of silver currently. At the lower boundary I will convert that silver to gold. PSLV to PHYS and silver bullion to gold bullion, which can be completed at bullion dealers.
The reason:
The idea is, with a portion of your portfolio, to exit fiat currencies on a permanent basis. Two reasons (a) fiat currencies are continuously being debased and (b) the king of the fiats, DXY, may not actually survive the next crisis. Stocks are priced and paid in fiat. Stocks to a point are inflationary hedges (as are many assets) but in a hyper-inflationary collapse of a fiat, they come pretty close to worthless for a long period of time (those that actually survive).
So gold becomes your insurance policy, silver becomes the speculative tool to profit.
As you can see, gold has tracked really well during the high inflationary period, last 50+yrs. Silver not so well, unless there is a crisis, which then allows on a % basis, outperformance (see ratio chart).
It has been a while since the 2008 crisis and even longer from the inflationary crisis of the late 1960's into 1980. There are no Paul Volckers sitting in the Fed. Additionally, the debt levels/GDP from the 1970's to today are starkly different:
Therefore the ability to actually do what Mr Volcker did, raise rates above the level of inflation, was possible due to the low(er) level of Federal debt. Today, the US and most of the world are at WWII levels.
Politicians, being who they are, will favour the 'inflate' our way out of trouble, as they did in the 1945 - 1980 period. The result will be an inflationary crisis like the 1968 - 1980 period, with the risk of a hyper-inflationary progression, collapsing the fiat currency.
For the underlying fundamentals:
Mine production of metals has been falling, reducing supply. This lack of supply cannot be corrected quickly, nor cheaply. It requires a lot of capital. The only way capital is attracted to the sector is through higher prices (demand).
With silver, higher prices creates new supply through people selling their silver that their great aunt Fanny has held since 1878. This is another reason that it makes sense to convert when the gold/silver ratio falls to the lower boundary.
jog on
duc