Explosive Silver Prices Will Be Mind Boggling

by: Bob Kirtley


Summary
 
- Gold has been ignored for 6 years and silver has been totally forgotten about by the majority of the investment community.

- This chart depicts the sudden rise in silver prices from around $14.50/oz to a high of $19.50/oz in just 4 months.

- Silver has been moving faster than gold as the gold/silver ratio shows that it now stands at a reduced level of 83.

All in all, the scene is set for an exodus from some of the large investment classes and into the precious metals sector, particularly silver.


Introduction

Gold has been ignored for 6 years and silver has been totally forgotten about by the majority of the investment community. This was evident when the gold/silver ratio rose to almost record levels at 95 which was reached in July 2019. The situation has started to change over the last few months as we have seen both gold and silver prices spring to life and increase in value. In particular, silver has been moving faster than gold as the gold/silver ratio shows that it now stands at a reduced level of 83.
 
This chart depicts the sudden rise in silver prices from around $14.50/oz to a high of $19.50/Oz in just 4 months. We can also glean that during that period of rapid movement, silver formed a number of higher lows which is usually a positive indication of a strong advance.
 
 
 
 
Gold/Silver Ratio chart
 
This chart shows that the gold/silver ratio rose to 95 when silver was out of favor and has subsequently reversed as silver prices gained some traction. Over the last 20 years, the average has been around 60 for this ratio so there is still room for silver to move to higher ground before it hits that average. There are some who are calling for the ratio to drop to around the 15 level.

These predictions generate vastly different prices for silver as per the following:
 
Gold at $1,500/Oz, the ratio at 83, Silver priced at $18.00/Oz. Gold at $1,500/Oz, the ratio at 60, Silver priced at $25.00/Oz. Gold at $1,500/Oz, the ratio at 15, Silver priced at $100.00/Oz.
 
The above calculations assume that gold will not increase in price, but we are firmly of the opinion that the new bull market in precious metals has started and will surpass previous all-time highs for both metals. If the price of gold continues to gain momentum, then the estimates shown for silver will be superseded by a considerable amount.
 
 
 
 
Reasons Behind This Move
 
There are a myriad of reasons that will drive this bull market, the two main reasons in our very humble opinion are the demise of fiat currencies and an economic recession which is long overdue.
 
A quick look at the currencies shows us that the central banks around the world are driving interest rates down to zero and in some cases negative territory, so there is no longer a return for savers who keep cash in a bank. They will need to do something else or sit and watch as their hard-earned wealth shrinks before their eyes.
 
We know that the European Central Bank has just re-introduced Quantitative Easing and we suspect it won’t be very long before other central banks follow suit. The constant printing of money only serves to weaken a currency and reduce its purchasing power.
 
The current economic recovery has been one of the longest in history and now looks to be exhausted as the S&P 500 struggles to retake the 3,000 level. The pullback could be severe as investors will move their funds out of the general markets in order to preserve their gains and avoid losses. Again, they too will be looking for a new home for their investment funds.

Other assets such as property have been in a bubble for some time in many parts of the world, and should that bubble burst, investors will look to liquidate their positions.
 
Conclusion
 
All in all, the scene is set for an exodus from some of the large investment classes as mentioned above and the precious metals sector has bottomed and is now heading for higher ground. The higher gold and silver go, the more airtime they will receive, and more and more investors will take an interest followed by taking an active part in this sector of the market.
 
Furthermore, it must be remembered that gold and silver and their associated stocks are tiny compared to the stock or bond markets, so even a small reallocation of funds will make a big impact on the demand side for these assets.
 
Silver prices will accelerate faster than gold prices so please give it some serious consideration along with the good quality silver producers that are due to experience a ballistic price rise before this bull market reaches its conclusión.

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