Commodity Trade Mantra

Silver, the Bargain of the Century, sure to Explode after Gold Breakout

Silver, the Bargain of the Century, sure to Explode after Gold Breakout

Silver, the Bargain of the Century, sure to Explode after Gold Breakout

Gold recently cracked through the $1,300 resistance level. Geopolitical instability continues to push the yellow metal higher as investors seek safe haven.

But as the spotlight shines on gold, it’s important not to forget about silver. Analysis shows it may well be the bargain of the century.

As Peter Schiff said in his most recent Gold Videocast highlighting the gold breakout, “$1,310 is still a low price for gold relative to where it is going. And of course, silver is an even better buy.”

In fact, silver is tremendously undervalued. In July, Peter pointed out the huge spread in the silver gold ratio, which currently stands at over 75:1. This means you can buy almost 80 ounces of silver with one ounce of gold. Consider that the historic average ratio is around 16:1.

So, the fact that you can buy 80 ounces of silver for one ounce of gold is an incredible buying opportunity. This is silver on sale. It’s one of the greatest silver sales of all time, relative to the price of gold.”

On top of the fact that silver is undervalued, fundamentals point to a bullish future for the white metal.

A recent article in Seeking Alpha takes a different analytical approach and also concludes now is a great time to buy silver. It looks at silver relative to the US dollar and confirms the white metal is extremely undervalued.

Silver is currently trading around $17 an ounce. This is around 34% of its 1980 all-time high of $50. However, this is an incomplete representation of what silver is really trading at, relative to US dollars. When you look at the silver price, relative to US currency (the amount of actual US dollars) in existence, then it is at its lowest value it has ever been.”

The analysis compares the price of silver relative to the monetary base. This effectively measures currency debasement. When you look at the numbers, the currency is now at its most debased level over the last 100 years.

With all the excess dollars out there, the market will eventually seek an equilibrium, which means that silver will spike in price relative to the US monetary base, as it did in the late 70s.”

If you take the all-time high in 1980 and compare it with today’s low of 0.0004, the math reveals that if the price of silver was currently at that 1980 level, it would be over $1,400.

So, in terms of US dollars in existence, silver is trading at 1.19% (17/1424) of its 1980 high – it is the bargain of the century.” – Peter Schiff

 

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request your views on the above article

  • jrf30

    I hate skewed and biased “facts”. LIke “This means you can buy almost 80 ounces of silver with one ounce of gold. Consider that the historic average ratio is around 16:1.” NO, it is not. When it was MANDATORY pricing, maybe it was, but show me anytime this CENTURY that it has been this low. I tink it will NEVER get that low again. Okay, show me any time this MILLENNIUM it has been that low of a ratio. Nope, not even close. 2010 got it into the low 30s, but mostly it seems to work both sides of 60:1. I’ll sell and go to gold when it hits about 45 – 50:1. Til then, silver is a better play, but don’t try to sell me on a 16:1 ratio as anything near “normal”.

  • Silver Savior

    I have always thought silver should be at least $1000 an ounce. I am certain it will be able to purchase that much in terms of value.

    Sorry gold, I like you a lot but right now it’s all about getting the silver before it’s too late. I will get into gold later when the silver goes to the moon.

    Should be able to purchase 100 ounces of gold with 75 silver eagles. Based on funfamentals, silver should actually be worth more than gold.

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