Silver recently started outperforming gold again, a watershed event. For long years this white metal has mostly lagged the yellow one, relentlessly battering silver sentiment. But gold surging into year-end 2018 finally sparked some life into moribund silver. This is a bullish sign, as silver has soared in the past once rising prices reach critical mass in attracting new investment capital. Silver looks to be nearing that point again.

Despite a good finish, 2018 was a rough year for silver. Its price slumped 8.6%, way worse than gold’s -1.6% performance. And that still masks miserable intra-year action. At worst in mid-November, silver had plunged 17.3% year-to-date. That was 2.2x gold’s comparable loss, and at $13.99 silver languished at a major 2.8-year low. A soul-crushing 96% of its early-2016 bull market had been reversed and lost!

Back in December 2015 silver had bottomed a few days before gold at a deep 6.4-year secular low. Over the next 7.6 months silver soared 50.2% higher, outpacing gold’s parallel new-bull upleg by 1.7x. That promising start didn’t pan out though, silver crumbed once gold’s advance stalled and failed. Ever since its August 2016 peak of $20.56, silver mostly ground sideways sandwiched between two major downlegs.

It was the latter one that finally bottomed in mid-November 2018, with hope lost and silver bearishness universal and suffocating. Silver’s fortunes are heavily dependent on gold, and silver effectively acts like a gold sentiment gauge. The weak silver prices reflected the lack of enthusiasm for gold, which wasn’t far above its own 19.3-month low of mid-August. Gold had slumped to $1200, and threatened to break below.

For better or worse, gold drives silver. Traders usually ignore the tiny silver market until gold has rallied long enough and high enough to convince them its upside momentum is sustainable. So when gold itself is down in the dumps, silver doesn’t have a prayer. But gold bottomed that day and started clawing back higher, so silver joined along in the bounce. That gradually grew into a new silver upleg over the next 8 weeks.