Jeff Clark: Why is Silver so Cheap Compared to Other Commodities?
Tom welcomes back Jeff Clark of GoldSilver.com to the show.
Jeff discusses his recent article on silver in which he compares silver to other asset classes’ performance since 1980. Silver and sugar are the only ones that remain below their 1980 peak. Everything else today is overvalued and this will change when the mainstream returns to this market. He says, “Focus on what you can control.”
Jeff explains why the Hunt Brothers had a minimal effect on the silver market in the 80s. This was a time when everything was responding to monetary events as every asset was rising in price.
Gold and silver are money because they hold their value for centuries. In contrast, just consider the loss of purchasing power of the dollar since the year 2000.
Jeff estimates that the 1980 silver price adjusted for inflation should be in the $250 range. History shows that silver is often stagnant for two to three year periods but then the price rapidly spikes higher. We don’t know precisely when but another spike is inevitable.
Jeff prefers to have physical possession of metals since the possibility of a massive economic catastrophe will persist. It’s best to avoid counterparty risks. Mining stocks are more of a leverage play on metals but one should be aware of the risks. Miners remain underappreciated and overlooked due to the prices of underlying metals. This is one area where there remains an excellent opportunity for investors.
Most metal investors were skeptical of the transitory inflation narrative. Now the Fed has abandoned that theory and is anticipating more persistent inflation. There is also evidence that we could move into a deflationary or stagflationary environment for a time. When the next crisis hits gold will fulfill its primary function of preserving wealth.
Jeff explains the importance of visiting mining sites and speaking directly with management. This can be very constructive for determining the quality of potential investments.
Lastly, he provides some tips for evaluating drill results.
Time Stamp References:
0:00 – Introduction
0:30 – Article on Silver
4:30 – Manipulation Types
6:40 – 80s Silver High
9:40 – Considering the Metals
11:40 – Harry Dent and Gold
13:45 – Inflation Adj. Silver (EDITS)
15:00 – Past Silver Spikes
17:00 – Physical, ETFs, or Miners?
19:30 – Underappreciated Miners
21:00 – Market Drivers & Inflation
23:00 – Analyzing Miners
25:00 – Visiting Mining Sites
27:00 – Geology & Experts
30:00 – Management Experience
33:00 – Jurisdiction Risk
35:00 – Drill Result Resources
37:00 – Keeping Perspective
39:00 – Wrap Up
Talking Points From This Week’s Episode
- Comparing asset inflation over forty years with silver.
- Gold and silver’s historical role as money.
- Evaluating companies, management, and drill results.
Jeff Clark is Senior Precious Metals Analyst at GoldSilver.com. He is an accomplished analyst, author, speaker, and globally recognized authority on precious metals. The son of an award-winning gold panner with family-owned mining claims in California, Arizona, and Nevada, Jeff, has deep roots in the industry. An active investor with a love of writing, Jeff eventually became a mining industry analyst, including ten years as senior editor for the world-renowned publication BIG GOLD. Jeff has been a regular conference speaker, including at Cambridge House and Sprott Resources events, the Silver Summit, and many others. He currently serves on the board at Strategic Wealth Preservation, a bullion storage facility in Grand Cayman, and provides analysis and market commentary for GoldSilver.com. Jeff’s previous positions include Senior Precious Metals Analyst for Hard Assets Alliance and was a Senior Editor for Casey Research.