2Sem.·

🥈 Silver on course for an all-time high - Is a breakout like gold on the cards?

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Since gold broke above its previous high from 2020 at the beginning of 2024, it has been soaring.

Major banks have made massive purchases - a clear indication of growing institutional confidence, but also growing skepticism on the market.




📌Historical perspective: inflation and precious metals


Historically, gold and silver have performed particularly well in times of high inflation. While paper money loses value, precious metals traditionally offer security and value retention.


👉 The historical price ratio between gold and silver is also interesting.

Historically, this ratio has usually fluctuated between 15:1 and 80:1, currently it is in the higher range (approx. 89)which suggests that silver has the potential to catch up in the long term.




🆘Gold & silver in stagflation


In stagflation scenarios - economic stagnation combined with high inflation - precious metals have performed above average in the past.


👉 During the stagflation in the USA in the 1970s, the price of gold exploded from around 35 to around USD 850 per ounce.


Currently, many experts see a possible stagflation emerging again, triggered by high national debt, geopolitical tensions and a fragile economic situation.


This could be a catalyst for further price increases in precious metals.




📈Bull market 2025 and beyond?


Fundamentally, there are many reasons for a continuation of the bull market in gold and silver:


  • 🪖 Persistent geopolitical uncertainties
  • 🆘 Possible stagflation in the USA and Europe
  • 📉 High government debt and expansionary monetary policy
  • ☀️ Particularly for silver: strong growth in industrial demand from electronics, solar energy and electromobility


The main arguments against this are possible interest rate cuts or a surprisingly strong economic recovery, which could lure investors back into risk assets.


👇 In the following sections, we will now take a look at the charts.

If you are not familiar with chart technology, it is best to skip straight to the conclusion at the bottom



📌 Gold chart

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☕Cup-and-handle formation


A cup-and-handle formation is a bullish (positive) chart pattern that often develops over several years. It resembles a cup with a handle and often signals a long-term trend reversal to the upside.


The formation consists of:


Cup: A long, u-shaped recovery that occurs after a sharp price rise and subsequent correction.

Handle: A shorter correction phase after the recovery before the price finally breaks out and ideally starts a long-term bull market.


👉 From 2011 to 2024, gold formed a clear cup-and-handle formation. (Cup: 2011 to 2020 - Handle: 2020 to 2024)

The most recent breakout from this formation in March 2024 could mark the start of a new long-term bull market.



📌 Silver chart

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🧐 It is worth taking a long-term look at silver since 1960:

  • Silver reached a spectacular high in 1980
  • A new high was only just reached in 2011


📈 Silver is currently approaching this all-time high again.

A long-term cup-and-handle formation can also be seen here:

  • Cup: 1980 to 2011
  • Handle: 2011 to today (possibly completed soon)


👉 Technically, silver may be on the verge of a possible long-term breakout, which is extremely exciting.



📌 Conclusion


I currently see strong arguments for investing in gold and silver in the fundamental data and the technical charts.

Yesterday (18.03.2025) I increased my silver position in $PHAG (-8,41 %) in order to benefit from a potential rally.


I have to say that my investment horizon for gold and silver is very long (20+ years), as I consider precious metals to be the cornerstone of my portfolio.


This is the current composition of my precious metal portfolio:



Do you have gold and silver in your portfolio?

If so, what is your weighting?




You might also be interested:

🆘 Crash-Warnsignale & die beste Strategie: Was sagt uns die Vergangenheit?

📈 When in Doubt, Zoom Out – Chart-Tipps für Langfrist-Investoren


#gold
#silber
#edelmetalle

18.03
WisdomTree Physical Silver logo
Acheté x500 à 28,57 €
14 287,00 €
12
14 Commentaires

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Is it possible to have it delivered like the gold? :)
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@Bmahone Unfortunately, this is not possible with this ETC.
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@BigMo what a pity
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No gold for me - the immense price surge since 2024 has put a spanner in the works. I'd like to have an ounce.

I have a few ounces of silver at home.

No paper gold or paper silver for me.
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@Artiskon Fair enough!

I would not buy more gold at the moment, although there is nothing to suggest that the rally will soon be over.

The catch-up potential of silver is particularly appealing to me at the moment.
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$EDR I currently find exciting
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@Max095 Why exactly? Chart-based or fundamental?
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@BigMo Silver bets on the chart
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2Sem.
I like the basic tone of your analysis. The only thing missing is a few precise price targets derived from the formations and the fundamental data. In addition, a cycle analysis would certainly have been interesting.

Question: Why only about 6% precious metals in the portfolio? The ideal risk level would be around 20-30%. And if only 6%, why not $3LSI?

Apparently you're not really convinced by your own analysis. 😅
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@Epi Thanks for your feedback.
I deliberately didn't want to publish price targets for the cup-and-handle formations here.
Although silver at $650 would certainly have made for a sensational headline 😂

Do you see 20-30% as the ideal risk level measured against what?

That's right, I'm currently not convinced enough of gold & silver to scale up my holding to more than a maximum of 10%.
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2Sem.
@BigMo Yeah, $650 would have been pretty lurid! 😅
Nevertheless, I find such technical targets interesting. They give an indication of the price potential.

A 20-30% share of gold in an annually rebalanced portfolio with 70-80% MSCIWorld or S&P500 since 1973 offers a roughly halved maxDD and a significantly increased Sharpe ratio (0.65 -> 0.8) with almost the same return.

5% gold has no measurable impact.

There are several studies on this on the net. Just google it.
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@Epi Interesting.
I don't get such dramatic differences in the Sharpe Ratio in backtesting now, but the maxDD with even better performance looks good.



Jan 1972 - Feb 2025 (yearly rebalancing)

95% US stock market
5% gold

Sharpe Ratio 0.47
Annualized Return (CAGR) 10.84%
Maximum Drawdown -48.19%



80% US stock market
20% Gold

Sharpe Ratio 0.52
Annualized Return (CAGR) 10.98%
Maximum drawdown -39.62%



70% US stock market
30% Gold

Sharpe Ratio 0.53
Annualized Return (CAGR) 10.93%
Maximum drawdown -33.53%
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2Sem.
@BigMo Okay, the SR doesn't increase as much for you, but it's still better. 👍

Have you rebalanced annually?

Otherwise, 30% gold is close to the optimum. Amazing and nobody really believes it. I have aligned my entire portfolio with this. 😬
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@Epi Yes exactly, that's with annual rebalancing.
Really amazing 🙂 Thanks for the input 👍
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