Barron's: Gold and Silver Have Cooled. Why It's Time to Buy
Article by Greg Bartalos in Barron's
The S&P 500 and Nasdaq notched record closes on Friday while gold and silver fell about 2%, continuing the softening trend, particularly for gold, that we have seen since the Israel-Iran cease-fire. Even so, precious metals have been big winners this year. Up 24% year to date, gold has delivered its strongest half-year performance since 2007, and silver is 22% higher, helped by the dollar having its worst first half of a year since 1973.
If you think stocks are destined to keep cruising on easy street, consider that the forward price-to-earnings ratio of the S&P 500 has jumped from as low as 18 in April to 22 now. If stocks are too rich for you, consider gold and silver, which both remain interesting, particularly silver.
In February, I suggested that silver was undervalued relative to gold. At the time, gold traded for $2,929 an ounce and silver fetched $32.25 an ounce. The gold-silver ratio, which measures how many ounces of silver can be bought for an ounce of gold, stood near 91. That is high on a historical basis, as the average ratio was 47 during the 20th century and has bounced between 50 and 70 in this .....