The price ratio of gold to silver has fallen precipitously in raging bull markets for the metals, so the silver price could have an upwards move at four times the rate of any gold price increase. I think that the fundamentals look better than ever, and…[that] there is an explosive move coming in 2014. [Indeed,] I think that within a reasonable time frame silver will probably trade over $100.
So says John Embry (sprottglobal.com) in edited excerpts from an interview* with Henry Bonner entitled Silver to 100 Dollars within ‘Reasonable Timeframe:’ John Embry.
[The following is presented by Lorimer Wilson, editor of www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Further edited excerpts from the interview are as follows:
…The economy is really much worse than most people are prepared to admit and this will have significant ramifications on various markets…[including] gold and silver. Both of them…are considerably undervalued …[and] under-owned too. I think that the fundamentals look better than ever, and…[that] there is an explosive move coming in 2014.
The Law of Unintended Consequences
…[An] upwards charge of the precious metals would expose the policies of zero-based interest rates as an utter fraud. If interest rates rose sharply as a result, it would bring the banking system to its knees. That would have a very negative impact on society as a whole. A lot of it has to do with the law of unintended consequences. The heavy-handed actions of the Feds in the financial system will likely lead to negative unforeseen consequences. As an analyst, I look at the current situation and try to figure out what might happen, but that does not mean I want it to happen.
…The smart people who are buying gold know what is going on and very few are smarter than the Chinese in this regard. As you know, they have been buying massive amounts of gold bullion for a while, [and] this is extremely negative from the perspective of the West. As that old adage says, gold goes where the wealth is being created. What does that say about us, that we are letting a significant portion of gold head east?
The Silver Price is Grotesquely Undervalued
…We believe that JP Morgan is likely the main entity that has suppressed the silver price in the paper market but we are now hearing that they may have accumulated a large position in the physical metal. To be honest, it is hard to know what to make of it.
The silver price is grotesquely undervalued so I have to congratulate JP Morgan if they are clever enough to sell paper and buy real silver. Before this is over, there is probably going to be a ‘force majeure’ in the paper market because there are so many claims to such a small amount of silver. If that were to occur, people who owned the metal or even exchange-traded products that have a real claim to the metal would be the big winners. When this comes to light, I think the upside to the silver price will be incredible. My colleague Eric Sprott and I think that within a reasonable timeframe silver will probably trade over 100 dollars – a big move from its current price of 20 dollars an ounce.
Silver Has More Upside Potential Than Gold
…[In my view] silver has more upside than gold…[although] many, such as Jim Sinclair, might disagree with me on this… About a third of the industrial usage of silver in photography has gone away these past few years because of the rise of digital cameras and yet the industrial demand for silver has held more or less steady...Some say that silver will always be a peripheral metal to gold, even if gold becomes part of the monetary system again…[because] silver is more an industrial metal than gold.
Looking at historical gold and silver markets, [however,] the price ratio of gold to silver – currently over 60:1 – has fallen precipitously in raging bull markets for the metals, going as low as 12:1 so the silver price could have an upwards move at four times the rate of any gold price increase.
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
*http://sprottglobal.com/thoughts/articles/silver-to-100-dollars-within-reasonable-timeframe-john-embry/ (Not a subscriber? Sign up for free insights three times a week from Rick Rule, Eric Sprott, John Embry and other natural resource investors.)
Last fall, we said the rally in PMs would take longer than most expected. Expectations were unmet in 2013, and it is possible that 2014 may be no different… gold gives no indication of beginning a strong rally that will change the trend, any time soon and, while the next sustained bull market may well favor silver outperforming gold, silver may have to go lower before it can go higher. Let me explain why this is the case. Read More »
No matter what you hear or read about gold and the prospects for substantially higher price levels, the trend is down, exactly opposite of what you know. When you compare what you know, an opinion, with what the market is telling you, the market is a more accurate measure, however counter-intuitive it may be to your opinion, [and THIS is what the markets are saying]. Read More »
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 – 95% correlated with that of gold suggests that a much higher price for silver can also be anticipated. Couple that with the fact 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 Read More »
We are starting to see some subtle changes in market behavior but the trend currently remains down for both gold and silver. For those who want to grow their capital, the best time to make a market commitment is with the trend and given how no one knows how the market will correct, it is best to wait and see first what the market reveals. Below are some daily and weekly charts on gold & silver charts to show you how things are developing. Read More »
Do not mess with Mother Nature! The natural law of supply and demand will always rise up from under the distorted efforts to contain it. The good news is that each passing week brings silver closer to its inevitable resolve: a powerful rally that will surpass all others. Read More »
Very poor sentiment towards gold and oversold conditions is reminiscent of the conditions seen in late 2008 and January 2009 [as seen in the chart below] when gold prices had fallen by more than 25% in 9 months. Subsequently, gold rose from a low on January 15, 2009 at $802.60/oz to a high less than 12 months later at $1,215/oz for a gain of over 50%. A similar move today would see gold above $1,800/oz by year end. Read More »