The last silver parabola was breathtaking, as it went to nearly $50, nearly 150% higher than its previous peak of $21.50, in 2008.
Now ask yourself this question: what if that pattern simply repeated the next time they lose control?
The Doc and Eric Dubin from SilverDoctors & SD Bullion joined the SGTReport this weekend to talk about all things silver.
We discuss the new record in silver eagle sales and the fact that in ancient Rome, payment for a hard day’s labor was 1/10th of once ounce of physical silver.
Today, due to the massive manipulation, a person earning $50,000/year is compensated with the equivalent of 10-11 ounces of physical silver per day.
More than 100 times the historic norm — and it’s only possible because silver is the most manipulated, most undervalued tangible asset on earth.
The Doc points out that with the current silver gold ratio over 70 to 1, while the earth’s mining output in 2013 was a mere 8.3 to 1, a move to fundamental valuations could see silver place a 10 bagger vs gold!
The Doc & Eric Dubin’s full interview with the SGTReport is below:
The magic of compound interest is well known. What is lesser known is the magic of the gold/silver ratio, not as a measure as it is mostly viewed, but as an application for increasing one’s holdings substantially, over time.
What is so great here is that no magic is involved, rather simply utilizing the market to more than double your holdings.
So-called “Gold Bugs” are considered ardent supporters of the PM [Precious Metal].
Silver stackers are just as avid. Then there are those willing to buy either or both.
The chart below is the gold/silver ratio going back 15 years, and this is a hindsight analysis brought forth to the present tense for future consideration that can greatly increase net holdings at almost no cost, those being transaction costs from a dealer.
Statistically, gold and silver prices closely follow each other.
But what is more important is the ratio between silver and gold and the trend of that ratio.
The 30 year gold/silver ratio chart reveals that the silver-to-gold ratio is currently priced at the low end of the range, long-term silver prices are gradually increasing relative to gold, and a price explosion could occur at any time!
The price of gold and silver will both hit new highs in 2014. The price of gold goes north of $2,000, and silver will quickly go over $50. When it does, it will get a little crazy. – Eric Sprott, Sprott Investment Management – SilverDoctors.com
Since the Federal Reserve was founded, the GSR has ranged from 15 to 100. The low-end of the range usually correlates with bull market tops in gold/silver and vice versa with the high-end.
Currently the GSR is 60, and I believe the recent movement in the GSR is signalling the possibility of a big move ahead for gold and an even bigger move for silver.
There are a number of reasons that silver should revert to the long term historical mean but the two primary ones are the fact that geologically in the earth’s crust there are fifteen parts of silver to every one part of gold.
The other reason is that silver is used in many industrial, technological, medical applications today and since the Industrial Revolution a huge amount of silver has been used up.
It is for this reason that we are more bullish on silver than on gold in terms of price. We continue to believe that silver will surpass its inflation adjusted high of $150/oz in the coming years.
Six of eight significant silver market lows in the past 23 years occurred when the GSR (gold to silver ratio) was > 64 and the RSI (Relative Strength Index of the GSR was < 35.
Silver, in late June and early July 2013, met the above criteria, along with a near record low RSI of the GSR, and a record low in the TDI Trade Signal Line. These are strongly bullish conditions.
The June/July 2013 low looks similar to the 2004 and 2008 lows.
We will see if the upcoming rally is similarly explosive, taking both gold and silver to new bull market highs.
Submitted by Deviant Investor
Silver has no counter-party risk. It is not someone else’s liability. The same is NOT true for hundreds of paper currencies that have become worthless, usually because the government or central bank printed them to excess to pay the debts of governments that did not control spending.
Since Nixon “closed the gold window” on August 15, 1971 and allowed the dollar to become an unbacked paper currency that could be created in nearly unlimited quantities, the gold to silver ratio has ranged from a high of approximately 100 to a low of approximately 17.
There is room for silver prices to explode higher, narrowing the ratio to perhaps 20 to 1. When gold reaches $3,500 (Jim Sinclair) and subsequently much higher in the next few years, and assuming the ratio drops to approximately 20 to 1, the price of silver could approach $200 per ounce, on its way to a much higher number, depending on the extent of the QE-Infinity “money printing,” panic, hyperinflation, and investor demand.
2012 is almost in the books. That means its time for another review of the year’s top stories on SilverDoctors.
The most important and most popular SD Stories of 2012:
Submitted by Morris Hubbartt:
This is a ratio chart of silver versus gold, and it suggests silver is set to dramatically outperform gold, in the intermediate term. RSI is close to confirming the latest CCI spike, and the Stokes oscillator at the bottom of the chart is flashing a significant buy signal.
A bullish Doji candle recently occurred, just outside of the lower Bollinger band. No technical pattern has a 100% success rate, but a Doji is highly dependable. The silver bears are treading on thin ice here, and the bulls are looking good.
The best trade for 2013 could turn out to be buying silver now.
The gold/silver ratio broke through significant resistance at 51 this weak- on a DOWN MOVE in gold and silver- almost unprecedented relative strength in silver during a cartel raid.
The ratio hit 50/1 early Friday, and a break through the level early next week will confirm a serious move in silver is underway.