If you follow precious metals, eventually you stumble upon, "The Case for Silver". If you look at the numbers, there is about 10-20x the amount of silver versus gold currently available. The variations are the result of mined vs not mined, do we count jewelry, etc. But historically it has been about 20x. Now however, it is close to 50x. Why would this be?
Gold, and by this I mean physical gold, has seen an explosion of interest recently. All manner of investors, including many professionals, make it a cornerstone of thier portfolios. John Paulson has a class of funds denominated in gold. GLD is one of the largest and most actively traded ETFs in the world now, as well as being one of the largest owners of physical gold. All of this activity has resulted in what I describe as the, "Financialization" of gold.
What does, "financialization" mean? It means that financial fiduciaries, and intermediaries now view gold (and its related derivatives) as a financial instrument to be bought and sold. When any asset is exposed to the financial system, it experiences inflation. Think of a privately held company. Before an IPO, it trades at 5x earnings, whereas after the IPO, when any and all can buy it, the multiple usually (but not always) expands. Only in rare instances do companies drift back to this "pre-financialization" level. Ironically, they are bought at this level more often than not on the belief that they will be re-financialized.
So gold is now solidly "financialized". Silver, despite a close link to gold, is not. SLV is much smaller, and much more volatile. Despite the best efforts of market promoters, silver has not been successfully financialized.
What if SLV succeeds in being financialized? Where would it go? 1/20th of gold's current price of ~$1700 would be $85, or nearly 3x. What if gold ceased to be financialized? At 20x the current spot price of silver, gold would be $700.
So a decent bet might be to long SLV and short GLD. Gold cannot become any more financialized. If currencies collapse, both silver and gold will become defacto currencies (and SLV and GLD worthless), so the relative upside of silver seems quite pronounced now.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.