To my knowledge, nobody formally complained when I, rather bravely I thought, dipped a toe into precious metals' waters last time I wrote, so this week I will be fully diving in: you have been warned!

But first, a reminder, I'm sorry, that by close of play Friday 2 August, US stocks had suffered the worst week of 2019 as investors worried about the most recent escalation of Donald Trump's trade war with China. The S&P500 fell for a fifth straight day ending its steepest weekly loss since last December’s sell-off.

Similar falls were seen across almost all major exchanges, with the UK FTSE100 ending the week down more than 2.3% and closing on Friday at just over 7,400.

FTSE100 Index from open 29 July 2019 to close 2 August 2019, from Tradingview.com

A certain Warren Buffett, Sage of Omaha, Chairman and CEO of Berkshire Hathaway, this weekend reported that his fund was, as at the end of June 2019, holding more cash than ever before: USD122billion to be precise. He called current stock prices for businesses with "decent long-term prospects ... sky high." 

He also, famously, once said that gold, "doesn't do anything but sit there and look at you."  Well, Mr Buffett, I am pleased to report that last week it sat there looking at us whilst enjoying a much happier time than most. The gold price moved up over 2.3% in sterling terms, after a bit of a US interest rate cut and some Boris posturing was factored in to the USD/GBP exchange rate (which fell from 1.24 to 1.215 during the week, just in time for your summer vacation to Florida ... :() The rise should not really surprise the regular reader because the cocktail of "good news" for the metal continues fairly well unabated.

But (as I am sure you were about to ask, and perhaps Mr Buffett would also if he was reading, as he has held this particular investment more than once) ... what about silver? Well, it hardly moved at all. To be honest, silver has been having a funny old time of it for some time now. Actually, that's being too kind: the price of silver fell 1.2% in the first six months of 2019 whilst gold rose 9.9% in the same period … and that is some underperformance.

At BullionRock, for want of something reasonably intelligent to say when asked, and whilst noting that past performance is no reliable indicator of future returns etc., we comment that silver tends to have a duplicity to its performance profile: on the one hand it reacts to the fortunes of the industrial companies that use it; and, on the other, it acts as a precious metal safe harbour. We also tell those who are still listening that silver tends to perform as though it were attached to gold by an elastic band; that is to say that its price usually moves later, and with greater volatility.

So is silver due a bounce, or a 'boing back' if you will? Well, the difference in the respective prices of the metals (known unimaginatively as the Gold/Silver ratio) is near 25-year highs, as shown below. Gold currently costs nearly 90 times more than silver, compared to an average of 60 times over the same period.

Why? Well, the Silver Institute’s annual World Silver Survey, published last quarter, said that global silver demand hit a three-year high in 2018, surpassing more than one billion ounces, and representing an increase of 4% from 2017. At the same time, global silver mine production fell for the third straight year, dropping 2% in 2018. This should be good news, but has obviously not filtered through to the silver price.

The bad news is that investment demand for silver coins and bars has really nosedived of late: falling to just 124.8 million ounces [worth c $2billion] last year, a nadir since the financial crisis. Investors have been giving the metal a really wide berth. As a result, silver has lagged during a time when gold has been rising, and that, to many, seems anomalous, particularly when viewed against the fact that silver has frequently (and quite handsomely) outpaced the yellow metal during bull runs.

Perhaps it is time to revisit another of Warren Buffett's famous sayings and get just a little bit "greedy when others are fearful."