Hi-yo, Silver! Away!

Gold dominates much of the conversations here with silver being brought in as a secondary consideration. Yet, when you look at silver by sheer numbers, over the last 18 months it has out performed gold 3 to 1. This makes silver the biggest bang for your declining Dollars. Silver comprises 10% to 25% of any well balanced tangible asset portfolio.

A brief overview of silver shows, until all major currencies went off the Gold Standard, silver held a price ratio of 16 to 1 compared to gold. In real terms it took a pound of silver to equate the price of one ounce of gold. By the 1970’s Nixon took the US off the Gold Standard effectively eliminating this ratio.  Allowing silver to seek its market levels independent of some regulatory ratio.

This has allowed for silver to hold an average position of 50 – 70 to 1 over the last 36 years, with highs of near 90 to 1 & lows of 17 to 1. The latter happened in the early 1980’s during the Hunt brothers attempted monopoly of the silver market, driving silver to a $50 high.  Golds current ask of $1,430 would place silver at $85 an ounce based on that ratio.  Do we believe silver will reach those levels? Not unless another run is made on silver like the Hunt brothers.  We have indications silver may seek a $50 an ounce level by the end of the year making the ratio at current gold pricing at 29 to 1.

Silver is currently at $35.90 an ounce, in the near term with the use of silver in manufacturing and the added demand as a bullion coin silver should see some real gains.  Daryl Guppy, independent analyst with focus on Asia & the Far East, contributes on CNBC giving some technical indication where silver will head next:  Next Target for Silver $39, But Stop Loss is Key: Chartist


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