Silver broke out a few months ago and briefly touched $40 an ounce. Since then, it has consolidated and traded in $36 to $38 range.
Gleason said during the recent move, silver was playing catch-up with gold.
“I think definitely silver typically will start slow and then catch up as people move more into the metals. We’re starting to see that transition where silver is finally getting a little bit of love.”
He noted that the gold-silver ratio has narrowed somewhat from the high of 106-to-1, but it remains historically elevated at around 88-to-1.
Historically, the ratio has averaged around 60-to-1 in the modern era. When it gets exceptionally wide as it is now, it tends to snap back to the mean, typically in a relatively short timeframe.
For instance, in 2020, the gold-silver ratio set a record of 123-to-1 as Covid hysteria gripped the world and then plunged to around 60-to-1 as central banks around the world cranked up the money creation machine to cope with governments shutting down economies.
In another example of this snap-back, the gold-silver ratio fell to 30-to-1 in 2011 after rising to over 80-to-1 during the money creation of the Great Recession in the wake of the 2008 financial crisis.
“I think that that is what we see happen as the gold bull market matures, silver starts catching up, and then eventually outperforms. So, I think we’re kind of in that transition period where the gold bull market is well underway and silver is starting to make a move.”
Gleason said he sees $40 as a key level. Once it breaks through that resistance, he said he thinks silver will run toward $50, perhaps as early as next year.
“If it breaks above $50, that is going to be a huge signal, a huge bias signal. And that’s when I think you’re going to see a lot of attention turn to silver in the mainstream.”
With gold extremely expensive (possibly over $3,500 by that point), silver will become an increasingly attractive option.
“People will start looking at silver as a bargain, and even though it’s at $45 or $50 or $55, I think it’s going to gain momentum, and especially if it gets over that $50 price, I do think that we’re going to be challenging the $50 level by next year. So, we’ll see. And then if it breaks – and I think it breaks through that – it’s going to go quite a bit higher from there.”
Gleason said he’s also seen some growing interest in platinum.
Platinum charted a 49.8 percent gain through H1, rising from around $900 an ounce in January to $1,360 at the end of June. That compares with a 25.9 percent increase in the price of gold and a 24.9 percent rise in silver.
In the second quarter alone, platinum jumped over 35 percent, closing H1 at a price not seen since 2014.
Supply constraints seem to be the primary driver behind this platinum rally.
Even with the big price increase this year, Gleason said that platinum and palladium only make up about 2 percent of his company’s business in terms of revenue and sales volume.
“It is very low in proportion to gold and silver, and I think that’s appropriate. I mean it, really, is a different type of metal. It’s extremely economically sensitive. It is obviously tight; there are some shortage indications of tightness in supply – palladium perhaps less so. I’m very bullish on platinum, but I wouldn’t put that at the center of my precious metals portfolio. It’s just another sort of diversifier, and platinum has historically been at a premium to the gold price up until about 10 years ago.”
Gleason pointed out that platinum was more expensive than gold at one time.
“I think that alone is a good reason to maybe get a little platinum exposure because of that catch-up move. There are some interesting things happening in platinum on the electronic side, on the hydrogen fuel cell batteries, and things like that. Jewelry: There’s jewelry demand switching from gold to platinum. And so those are other factors that are driving platinum right now. But again, I would keep it as a small allocation, and that’s certainly what we’re seeing. We’re selling more platinum, but just a little bit more.”
Gleason called the precious metals market, in general, “undiscovered.”
“I can tell you, if you ask all the people in your orbit, how many of them own gold and silver, I bet very few, maybe one, two, 3 percent. Maybe they’re not going to tell you, which is probably smart. You don’t want to talk about what you own, especially if you have it in your house or whatever. But the bottom line is less than 2 percent of the U.S public has any gold or silver whatsoever other than maybe a piece of jewelry, and that’s a problem.”
He said he thinks that’s going to change.
“I think we’re very early. I think, again, as the stock market rolls over or inflation kind of runs away, and yet the Fed is slashing rates, there’s no tomorrow. I think we’re going to see an awakening in our country and in North America and in Europe, where we’ll see a lot of people coming into this. But right now, we’re very early and we’re kind of on the cutting edge, you and I and everybody who’s listening today.”
