Silver set to outpace gold in 2021

Although the gold price hit all-time highs this past summer, silver still has plenty of catching up to do. After temporarily trading at just $12 per ounce during the March panic in the marketplace, silver may look pricey now. But it has far more upside ahead than gold, as bullion likely struck a bottom in late November and is set to continue its rally after completing its recent 15% correction of outsized gains.

With silver at $25 per ounce, the mostly industrial metal has been a clear laggard. It’s estimated that around 60% of silver is utilized in industrial applications, leaving only 40% for investing. Of the 60% used for industrial applications, almost 80% ends up in landfills. This means that the rate of “loss” due to industrial use is much higher than gold’s, making it more susceptible to supply constraints. From over 50 billion troy ounces of silver ever mined, less than 5 billion remains.

To match gold at all-time highs, silver needs to nearly double to reach its 1980 and 2011 peaks of just over $49 per ounce. This tells us that on a percentage basis, silver will be looking to outpace gold going forward. Silver historically lags the gold price during early stages of precious metals bull markets, and it’s only at the end of a major rally for the metals in general when both assets hit new highs at the same time.