Long Term Silver Has Provided a Hedge Against a Declining U.S. Dollar/In Recent Years The Dollar Has Held Up Well vs. Silver
In Silver vs. the Dow we showed the volatile nature of silver vs. the Dow Jones Industrial Average. Silver is a spike and dive commodity and its performance against the DJIA over the past few decades shows years of severe losses against the Dow and years of spectacular gains.
Silver’s performance against the dollar has been a similar story of surges and crashes. Silver does not have the same track record of gold in providing a consistent store of value.
The advantage of silver over gold is that while it crashes harder in bear markets, it soars higher in bull markets. This is due in part because the silver market is much smaller than the gold market and has a more even mix of industrial and investment demand.
The price of silver has been falling the past two years despite the supply/demand dynamic being in deficit during the same time period.
Here are recent charts that show silver’s performance against the dollar index* during six month, two, five, ten, twenty and thirty year periods. You will note periods of extreme dollar strength vs. silver and vice versa.
* The US Dollar Index tracks the US dollar vs. the Euro, the Japanese Yen, the British Pound, the Canadian Dollar, the Swedish Krona and the Swiss Franc. The Euro comprises nearly 58% of the index.
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