The majority of analysts maintain that gold will reach a parabolic peak price somewhere in excess of $5,000 per troy ounce in the next few years. Given the fact that:
- the historical movement of silver is 90 – 98% correlated with that of gold and that
- silver is currently greatly undervalued relative to its average long-term historical relationship with gold
and it is realistic to expect that silver will eventually escalate dramatically in price. How much? This article applies the historical gold:silver ratios to come up with a range of prices based on specific price levels for gold being reached. Words: 691
So says Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com, www.munKNEE.com and the Market Intelligence Report newsletter (It’s free – sign up here). You can also “Follow the munKNEE” daily posts on Twitter or Facebook. Please note that this complete paragraph, and a link back to the original article*, must be included in any article posting or re-posting to avoid copyright infringement.
Gold to Silver Ratio
How both gold and silver perform, in and of themselves, does not tell the complete picture. More important is the price relationship – the correlation – of one to the other over time, the gold:silver ratio.
Let’s look at the gold:silver ratio from several different perspectives:
- since 1985 the mean ratio has been 45.7:1
- during the build-up to the parabolic blow-off in 1979/80 the ratio dropped from 38:1 in January 1979 to 13.99:1 at the parabolic peak for both metals in January, 1980.
For a fully interactive version of the gold:silver ratio over the years showing key moving averages as well as the dates and levels of points on the chart click on www.macrotrends.org/1441/gold-
Let’s now look at the various price levels for gold and the various gold:silver ratios mentioned above, one by one, and see what conclusions we can draw.
First let’s use the price of $1,300 for gold and apply the gold:silver ratios mentioned above in approximate terms and see what they do for the potential % increase in, and price of, silver.
- Gold @ $1,300 using the 45:1 ratio puts silver at $28.89
- Gold @ $1,300 using the 13.99:1 ratio puts silver at $92.92
Now let’s apply the projected potential parabolic peaks of $2,000, $3,000, $5,000 and $10,000 to the various gold:silver ratios and see what they suggest is the parabolic top for silver.
Silver’s Potential Price Range With Gold At $2,000
- Gold @ $2,000 using the ratio of 45:1 puts silver at $44.44
- Gold @ $2,000 using the ratio of 14:1 puts silver at $142.85
Silver’s Potential Price Range With Gold At $3,000
- Gold @ $3,000 using the ratio of 45:1 puts silver at $66.67
- Gold @ $3,000 using the ratio of 14:1 puts silver at $ 214.29
Silver’s Potential Price Range With Gold at $5,000
- Gold @ $5,000 using the gold:silver ratio of 45.1 puts silver at $111.11
- Gold @ $5,000 using the ratio of 14:1 puts silver at $357.14
Silver’s Potential Price Range With Gold at $10,000
- Gold @ $10,000 using the gold:silver ratio of 45:1 puts silver at $222.22
- Gold @ $10,000 using the ratio of 14:1 puts silver at $714.29
It would appear that, any way we look at it, physical silver is currently undervalued compared to gold bullion and is in position to generate substantially greater returns than investing in gold bullion.
- Register for our Newsletter (sample here)
- Find us on Facebook
- Follow us on Twitter (#munknee)
- Subscribe via RSS
Gold to Silver Ratio Conclusion
History will look back at the artificially high gold:silver ratio of the past century as an anomaly caused by the world being deceived into believing that fiat currencies are real money, when in fact they are all an illusion.
This fiat currency experiment will end badly in a currency crisis and when that happens, as it surely will, gold will go parabolic and silver along with it – but even more so – as the gold:silver ratio adjusts itself to more historical correlations
The breakdown after the QE4 announcement, and now the extreme move into a yearly cycle low has, I daresay, convinced everyone that the gold bull is over. I would argue that it is impossible for the gold bull to be over as long as central banks around the world continue to debase their currencies [and that] gold is just creating the conditions – a T-1 pattern – necessary for its next leg up to what I expect to be…around $3200 sometime in late 2014 or early 2015. [Let me explain.] Words: 560; Charts: 3
Bubbles tend to follow the 80/20 ratio indicated in the Pareto Principle where approximately 80% of the price move occurs in the LAST 20% of the time. That being the case it would appear that gold and silver could conceivably top out around $9,000 per troy ounce and $250/ozt respectively .This is not a prediction of future prices of gold and silver; it is an indication of what could happen in a speculative bubble environment based on the history of previous bubbles. Words: 1280; Charts: 1
There are many predictions for the price of silver. Some say it will crash to nearly $20, and others proclaim $100 by the end of 2012. The problem is that some predictions are only wishful thinking, others are obvious disinformation designed to scare investors away from silver, and many are not grounded in hard data and clear analysis. Other analyses are excellent, but both the processes and analyses are difficult to understand. Is there an objective and rational method to project a future silver price that will make sense to most people? Yes, there is! [And here it is!] Words: 1071
There is a massive amount of energy underlying the silver market, and when it is ready to unleash, we will see price/value increases that will stun even the most ardent silverbugs…The real power of this expected move is likely to be released only some time after the price of silver has surpassed the $50/ozt. level. [Let me explain.] Words: 685
I believe that silver could go to $60 per troy ounce by the end of 2014….I also believe silver will be the best single investment of this decade. The following article is focused on why I think you should seriously consider having a significant percentage of your investment portfolio in silver. Words: 1600
It’s true that there are “NO SURE THINGS” in life…but an investment in SILVER comes DARN CLOSE! Yes, you’ll have to ride the tidal wave of price manipulation but when the waves die down you will fully appreciate the power and value of SILVER. Let me explain.
I believe there is more opportunity in the silver market over the next two years relative to gold and, as such I’m now advocating accumulating a large overweight position in silver relative to gold because, over the long-term, there is such a great demand vs. supply situation developing….Before investing in silver, however, there are a number very important things that you must understand about the silver market. Let me explain. Words: 899
The price of silver is going to go much, much higher – much higher – over the next decade [relative to gold according to Jim Rogers and I concur. Below are 5 solid reasons why I believe that is the case.] Words: 767
The value of silver has skyrocketed in recent decades –leading many investing experts to believe that silver’s price could outpace gold for the first time in history. This infographic covers silver’s meteoric increase and the factors that have led to silver’s exploding value…[and] takes a nod to the future to see where silver’s price may be headed based on the most up to date demand data.
Silver has given returns of 584% in the last ten years and this article discusses the reasons for believing that silver can produce another decade of over 500% returns. Words: 954; Charts: 7
The price of silver has been corroding for much of the past year but a variety of signals in recent months suggest that it may not be long before silver begins to shine once again. [This article identifies 5 such signals and/or reasons why that may well be the case.] Words: 643; Charts: 2
Don’t own any gold or silver yet? New to the precious metals? Regardless whether you are a novice or seasoned veteran, the following seven points provide essential background information you can use to help determine whether the precious metals are right for you. Words:1311
Oftentimes perception, and not reality, rules the day with the thousands or millions of speculators placing short term bets with assets like silver. These perceptions are particularly strong given that paper players in the silver market often control the price in the short term (6-8 months), since there is so much more paper silver than physical metal out there…Here are five common myths about silver that I bet many speculators still believe are true. Words: 1638
Now that Q4 is underway, investors are scrambling to find the right asset class for this rocky environment. Last quarter wreaked havoc on a number of investments and portfolios alike, as the global economy seems to be on a downward spiral. Given the current environment, various investors have flocked to their favorite safe havens to wait out the storm. Gold is perhaps the most popular safe haven in troubled markets, though its actual use as a metal is relatively low. As such, there has been much speculation over whether or not the metal is overvalued, scaring a number investors out of gold and into another precious metal, silver. Words: 3422
We have a financial system that’s on the edge of a cliff here. People have to be in precious metals if they want to protect themselves. Everyone who’s an investor has money. They have it invested in some paper instrument and when they realise they have a problem with their money in a bank or owning some government note the demand for gold could just be overwhelming! It could be parabolic all of a sudden. Currently, only o.75% of the world’s financial assets are in gold so just imagine what a 5% to 10% interest in gold would mean for its price. On top of that, I believe that silver will get back into a 16:1 ratio to gold in three to five years for sure so that means that silver is going to have a great upside potential. Got gold? Better yet, got silver? Words: 5169
The fact that nobody really knows with absolute certainty where gold will really go from today onward makes people try to make their own guesses about what can happen with the yellow metal. One of the methods to do that is to look back into past situations and try to estimate if what is happening now is somehow similar to those past events. The situation in the gold market today is different than the one in 1980 in a few important areas. Even if past patterns don’t give you any certainty, though, sometimes they can limit the uncertainty. Let us analyze that in more detail. Words: 1260; Charts: 2
For those new to the metals space, knowing where to go to buy or sell physival gold for a fair price is difficult. That’s where APMEX, formerly known as American Precious Metals Exchange, enters the scene. APMEX has become a favorite among precious metals buyers and sellers for a few key reasons noted below.
I believe it is important to mitigate the risk of loss with your physical bullion by diversifying the locations where you hold it. To this end, I think it is wise to have some bullion on your property, some in secure storage off site, a portion stored with an ETF like CEF and ideally at some stored at a location overseas. In order to obtain the overseas diversification, I [recommend BullionVault because, while their 43,000 customers have already done business with them at some of the lowest costs available, they have just reduced their initial commission fee by 37.5% - from 0.8% to just 0.5%! Let me explain further some of the advantages of doing business with Bullionvault.] Words: 796
Compare and save! Who is the most reputable, cheapest and most reliable precious metals dealer to buy your physical gold and silver from? Their are hundreds of dealers touting their wares but when it comes to direct comparisons only a few rise to the top of the list. Here they are. Words: 262