{"id":165627,"date":"2020-02-27T10:44:31","date_gmt":"2020-02-27T15:44:31","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=165627"},"modified":"2020-02-27T10:45:27","modified_gmt":"2020-02-27T15:45:27","slug":"silver-in-a-pandemic-will-it-protect-watch-the-second-wave","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/02\/silver-in-a-pandemic-will-it-protect-watch-the-second-wave\/","title":{"rendered":"Silver in a Pandemic \u2013 Will It Protect? Watch the Second Wave"},"content":{"rendered":"
February 27, 2020<\/div>
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By FirstMacroCapital<\/a> – 4 Pandemics \u2013 Watch the Second Wave.<\/strong><\/p>\n

While attention is focused on the overall scale of COVID-19, from many of the leading specialists at Imperial College, Hong Kong University, and Harvard University. If this is a pandemic, which looks more and more likely by the day. Where is this pandemic currently in the pandemic cycle? Is it early in the cycle? Halfway through the cycle? Or is it at the end of the cycle?<\/p>\n

If we take the Ray Dalio principle, \u201cWherein history has this happened before<\/u><\/strong>?\u201d. Many times, we have to go back in time where the current generation experiencing a difficult event wasn\u2019t even alive when the past event occurred or was too young to be aware of it.\u00a0 What historical examples can we look at, to see what has happened during past pandemic waves? The Government of New Zealand in their pandemic preparation has put together an analysis of four major\u00a0pandemics\u00a0going back more than 130 years.<\/p>\n

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While the first wave gets everyone\u2019s attention as a pandemic takes hold. Commonly there is a second and third wave that has been far more serious than the first wave. \u00a0As the former FDA Chair, Dr. Scott Gottlieb said in a recent interview,\u00a0\u201cthe next 2-4 weeks will be the most important to see what happens next\u201d.\u00a0<\/em>If history repeats, it will be the second wave that is most concerning.<\/p>\n

Will silver be a store of value for investors if COVID-19 escalates further?<\/strong><\/p>\n

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During the 1889-1892 pandemic, silver prices rose during the first phase of the pandemic to a high of $1.06\/oz in 1890. As the pandemic got worse in 1891, the silver price then fell and continued to fall until the end of the pandemic in 1892.<\/p>

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The Spanish Flu saw the silver price accelerate during this time period, from $0.90 at the end of 1917, to a high of $1.36\/oz by March 1919 when the pandemic finally subsided.<\/p>\n

During the multi-year pandemic from 1957-1963, we saw silver prices rise from $0.91\/oz to $1.31\/oz in July 1963. The silver price did not rise until there was a pause in the pandemic between the second and final, third wave.<\/p>\n

In the 1968-1970 pandemic, we saw the silver price fall initially from $2.34\/oz to a low of $1.98\/oz as the first wave took hold, before accelerating to a high of $2.75\/oz during the summer months of 1968 before the second and final wave took hold in the winter of 1968 and in 1969. This final wave took the silver price down throughout the second wave. Silver bottomed at $1.69\/oz in June of 1969.\u00a0Mixed results throughout the pandemic in 1968-1970.<\/strong><\/p>\n

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During this first phase of the COVID-19, we have seen silver head higher, but it is still early days.<\/p>\n

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Gold was pegged during all four of the pandemics outlined, and we view gold as being treated more like a currency today, particularly as we enter 2020-Q2, where we see slowing GDP growth and slowing inflation, pushing real rates down. Real rates falling is positive for gold.<\/strong><\/p>\n