I agree with your post except the bit about gold outperforming silver.
Remember silver is 'poor man's gold' and it's current ratio to gold suggests that it is undervalued. It's scope to outperform gold is even more evident when analysing it's historical movements in chart form (see below). If gold goes crazy like it did in the late 70's, then watch silver fly (IMO).
There will be many a 'poor man' who can't afford to invest in Gold so will opt for Silver as their choice of currency. Silver is also more practical than gold as a day to day currency (if things ever get that bad) because there is more of it and it's obviously a lot more affordable for the average person to own. You never know, we might one day need to buy our groceries with a silver coin and save any gold we may have to purchase that higher value item, such as a car or house.
According to Eric Sprott, the people of India are on track to consume an additional 4000 tonnes of silver this year (6000 tonnes in total & triple that of last year). That additional 4000 tonnes represents approx. 17% of global supply, and this additional demand is from one country only!
By contrast, buying gold has become more difficult for Indians who are being discouraged to own the yellow stuff by way of higher tariffs introduced by their own government (in order to protect the Rupee). However the people of India aren't stupid when it comes to protecting their wealth & don't trust their government or the Rupee, so they are buying silver in record amounts (instead of gold).
Again to quote Eric Sprott;
'The silver investment market is very small. While the dollar value of gold in the world approaches $9 trillion, the value of silver in the forms of jewelry, coins, bars and silverware is estimated at around $150 billion (5 billion ounces at $30 per ounce). This is a ratio of 60:1 in dollar terms.
How long can investors continue to buy silver at the current ratios when the availability for investment is only 3:1? We are surprised that the price of silver has remained at such a depressed level compared to gold. Historically, the price ratio between gold and silver has been 16:1, when both were currencies. Today the ratio is 55:1, so what are the numbers telling us? We believe this is one of those times when smart investors will be well rewarded to “Follow the money.” '
