Silver tracks Gold. Some investors see it as the fast horse in the precious metal race. M model is different. Gold and Silver have been retail assets for a very long time but now Gold is a Government asset while silver remains a retail asset. Gold is being driven by government purchases and silver has lagged but now retail is piling in and the Silver horse is running.
This long term chart give one way of looking at the potential run Silver can have.
In the last ten yearsthe Gold out performance hasn’t been so marked but it tookthe shape catch up repricing of 2020 to close that gap.
It is quite possible we are in such a catch up period.
So this is where I say although Im up to the gunnels with precious metals, I am not a precious metal maxi. Im simply invesing in what I see as the current trends. The key trend to me is the aweful sabre rattling that is going on. Gold is for war and precious metals follow.
Yesterday Trump tweeted… “Please give my warmest regards to Vladimir Putin and Kim Jong Un as you conspire against The United States of America….” That is about as big as a buy signal as you can get and then when you read it again carefully, if you care too, its worse.
Who is giving them President Trumps regards? Who is the ‘You.’ Xi?
As this drumbeat of World War continues govenments must lay in Gold and Gold must appreciate in real terms and Silver will follow.
So how far can it go. I see $4000-$5000 Gold as the next target and that $50-$60 Silver. Then there is a troubling fact I cant quite absorb. Don’t worry its bullish.
They mine 3200 tonnes of there abouts of Gold. They mine 25000 tonnes of Silver. Now these numbers are round but lets say 8 to 1. Lets make the math easy, lets say 10 to 1, the old ratio long back when Nero was playing the lyre. The production ratio is incredible out of whack with the price. Yes that’s the wonders of demand and supply for you, but if retail follow government into precious metals retail is going Silver and in the end retail is a sleeping giant.
As such in a world where the US believes China and Russia is conspiring against the US Gold and Silver seems a one way bet, with Silver as once again the fast horse.
Silver $100 an ounce? Unless there is de-escalation Silver is heading there.