Silver Insights Series: Mapping Silver’s Last Bull Run vs. Gold

We’re launching the Capital 10X Silver Insights Series to provide investors an analytical edge investing in silver and silver mining stocks. We’ve got you covered from the macro drivers in the silver market to identifying silver stocks trading at a discount.

History Does Rhyme: Silver’s Bull Run August 2010 – April 2011

Gold’s last bull market lasted 144 months from August 1999 to August 2011, gold appreciated +611% during this period – from $255/oz to $1,820/oz.

We mapped the silver/gold ratio historically, there was a specific period between August 2010 and April 2011 when silver significantly outperformed gold (the 1st yellow highlighted box).  Silver has since under performed gold for nearly a decade.

During silver’s bull run the metal appreciated by +167%, outperforming gold by a very wide margin.

How Did Silver Mining Stocks Perform vs. Silver?

Silver mining stocks on average performed inline with silver during this bull run, silver miners were up +156% vs. silver +167%.

Silver mining investors would have been disappointed with this outcome as the mining companies have inherent leverage to the metal, both operational and financial.

However there was a big spread in performance among the silver companies. The best performing silver mining company – First Majestic Silver, was up +438% during the period. The worst performing silver company – Pan American Silver, was up +57%.

The table below outlines the performance of each of the silver mining stocks during the bull run, Fortuna Silver (TSX: FVI, NYSE: FSM) and First Majestic Silver (TSX: FR, NYSE: AG) were the only stocks to outperform the silver ETF (NYSE: SLV).

Wheaton Precious Metals (TSX: WPM), Coeur Mining (NYSE: CDE), Silvercorp Metals (TSX: SVM), Hecla Mining (NYSE: HL) and Pan American Silver (TSX: PAAS) all under performed the silver ETF.

Bottom line: Stock picking mattered. Investing in a silver mining ETF like the Global X Silver Mining ETF (NYSE: SIL) would have yielded returns no better than investing directly in the metal itself.

In the next edition of the Silver Insights Series we’ll take a closer look at the current gold and silver landscape and the parallels to the previous bull market.