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« The Dollar Cannot Be Devalued and Suicidal Bankers | Main | JPMorgan defeats appeal in U.S. silver price-fixing lawsuit »
Sunday
Mar302014

Is Silver Set to Rally?

Historically, the price of that other precious metal, silver, has been strongly correlated to the price of gold, with silver prices rising whenever gold prices grow. Yet for the year to date, the opposite has occurred. Despite gold’s recent rally, seeing its price firm by 6% for the year-to-date, silver’s price has softened 2%, indicating it is undervalued and should rally if the historical correlation between the two assets is to be believed.

A key indicator highlights a silver rally is imminent
Another indicator of whether silver is undervalued and could rally is the gold to silver ratio, a measure of how many ounces of silver are required to buy an ounce of gold. At the start of 2013 the ratio was 54, whereas at the start of 2014 it had widened to 61 and since then widened even further to a ratio of 66 ounces of silver to buy a single ounce of gold.

This rising ratio indicates silver is underpriced in comparison to gold and as a result a number of analysts expect silver to rally and the ratio close from 66 to 60 over coming months.

What does this mean for investors?

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The miners have started 2014 very well indeed on the back of rising gold prices, so the question is; is this the real deal or another head fake? Is tapering the death of this rally? Is the bottom really in? Could there be a final capitulation just ahead of us? Will the summer doldrums take the PMs lower?

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Reader Comments (4)

Motley means, an incongruent mixture , in other words--(not in keeping with proven or theoretical parameters). The parenthetical statement describes your article offering today and , in fact, most days. If I had been in a 5 year coma and awakened to your headline thesis today, I would have no idea I had even taken a nap. Nothing is different, your silver prediction demonstrates total disregard for silver market manipulation. Big Banks and Investment Houses have no impact on silver supply and their demand is only affected by the paper they exchange with the Federal Reserve Banking system. Only money is exchanged and the silver supply is only reduced by the small investor and commercial users of the metal. The "Big Boys" are just well accomplished thieves moving paper and collecting profits from the money supply as it is printed by the FED. They are all in cahoots and they share the profits. It is the biggest scam ever perpetrated by a Government Banking System and justified by their enablers, people just like you.

March 31, 2014 | Unregistered CommenterJames Turk

We exist to make a profit for our subscribers and ourselves and to that end we have shorted stocks in this sector during this bear phase. Manipulation or not, silver prices have been going down for the best part of 3 years so to buy and hold would be to lose money, which we prefer to avoid.

When the market changes direction and the bull rally resumes we will trade accordingly and hopefully generate profits on the way up.

Regardless of the COMEX physical silver can now be purchased for under $20.00/oz and the price could go lower this summer.

We don't expect to buy at the very bottom do we do intend to try and get close to it.

All the best,

Bob K

March 31, 2014 | Registered CommenterSilver Prices

$SILVER created a death cross on the weekly chart. This occurred in August 2013. The 20day moving average has broken major support on the daily chart(major support 50 and 200 day moving average). This has happened in the last eight days on the daily chart. I feel that there will be more of a down trend in silver in the near future. I did expect silver to turn up this spring. But with, the treasury continuing to cut stimulus lookout. This could be hitting new lows. 4/5/2014

April 5, 2014 | Unregistered Commenterjerrold minyard

Agreed

April 7, 2014 | Registered CommenterSilver Prices

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