Silver has once again proved to be a more volatile precious metal than gold.
Friday was a bad day for both, but silver took the prize of having a worse one. It was down over 15 percent as compared to gold’s nearly 6 percent fall.
This repeats a pattern that was seared into the memories of anyone who happened to be a silver owner in 1980 when it topped out at $50 a troy ounce.
Silver then proceeded to fall by almost 80 percent while gold fell by less than half.
I expect gold owners took no consolation from having lost less at the time, but if the silver investors of the present time take any lesson from 1980, they will be more nervous and skittish than current gold owners.
Gold still possesses some attributes that silver does not have. The fact that the world’s central banks have large stocks of gold means they do not look kindly on taking losses. This is especially true of those new to the grand stage of world economic powers. The People’s Bank of China certainly doesn’t want to see all of its recently acquired gold repeatedly devalued.
Gold is still priced higher than it was at the beginning of the year while silver has now seen all of its gains slip away.
Are we yet to see still more storms of selling?
The problem, as I pointed out in the Metal’s Mania online seminar Thursday is that you cannot quantify either panic buying or panic selling.
The impulse to push up the price of gold by 700 percent during the decade that prices rise by 25 percent seems to be overkill, but since you cannot quantify a relationship, you just watch it unfold.
Likewise, when gold holders get skittish, statistics of any kind are not going to console someone who thought he owned a more stable asset.