DAVID MILSTEAD
RTGAM



Silver and gas

Silver and gold, silver and gold … Burl Ives had it in the right order when he sang the tune in Rudolph the Red-nosed Reindeer.

Indeed, while gold has been Topic A among commodity investors this year, "it was silver that really stole the show in 2010," notes Douglas Porter of BMO Nesbitt Burns, as the metal soared more than 70 per cent. (Gold, by contrast, has gained less than 30 per cent so far this year.)

In fact, if you want to see some dramatic price comparisons the tune is not "silver and gold," but "silver and gas." Unfortunately for Canada, Mr. Porter notes, natural gas was at the back of the pack of commodities, falling more than 20 per cent.

This, he notes, extends a long-standing relative trend. In late 2005, it took less than one million British Thermal Units of natural gas to buy one ounce of silver. It now takes seven million units of gas to buy that silver. The biggest acceleration in the ratio has come over the prior two years.

Natural-gas boosters hoping for the typical cold-weather price boost have been dogged by continued oversupply in the sector. With precious metals continuing to pique investor interest, the ratio might climb even higher.

.......RL