The market hasn’t caught on to the secret silver rally yet but could quickly send prices more than 60% higher
After seriously underperforming other precious metals last year, the market took its eye off of silver. Investors turned their attention to gold as a store of value and copper as a measure of the global economic recovery.
As usual, Mr. Market’s narrow-sightedness has helped some investors get in on the beginning of a what could be a huge rally. Silver outperformed gold by 5% in October alone and one historic measure could see silver prices 60% higher before the rally is over.
Don’t miss the opportunity before the rest of the market catches on.
Gold-Silver Ratio Hits a Critical Inflection Point
Most of the market has missed the rally in silver because the precious metal has widely fallen out of favor over the last few years. The price of silver has dropped nearly 70% since its 2011 high and gold prices outperformed by 18% in 2014.
Anyone that’s been watching the gold-silver price ratio knows that the recent rally could just be the start of a multi-year jump in silver prices.
Since 1970, the price of an ounce of gold has averaged about 55 times the price of an ounce of silver. There is some fundamental backing to the imbalance. The U.S. Geological Survey estimates about 17.5 times the amount of silver in the ground relative to gold. This has acted as a floor to the ratio and market forces have typically acted as a ceiling.
And that gold-silver ceiling of 80 was reached late September. In fact, the last three times the gold-silver ratio reached 80 was in 1995, 2003 and 2011 and silver went on to rally more than 70% each time.
To balance back to its long-term average, the price of silver would have to rally to $20.76 an ounce for a 33% upside from the current price. More likely to happen, given the market’s tendency to push prices through the historical average, is a rally to a gold-silver ratio of 45 or less. That would mean silver prices of $25.38 and a gain of 62% or more from here.
Key Drivers in the Silver Rally
Several factors could help push the price of silver higher for a multi-year rally. Beyond the technical impetus from a rebalancing of the gold-silver ratio, silver output at global mines looks to be coming down. Since silver is primarily produced only as a by-product of mining for gold, copper and other metals, silver output may not increase significantly even as the price increases.
The top silver producing countries of the world are chronic geo-political nightmares. Of the top six producers; Mexico, Peru, Russia and Bolivia account for more than half the world’s silver supply. Not only could geo-political problems threaten supply but it will take longer for producers to ramp up capacity in these countries when prices do come back up.
As the technical rebound to the average gold-silver ratio and other factors drive a rally in silver, there will come a point where the market sits up and takes notice. When that happens, retail investors will come rushing in along with massive buying from exchange traded funds (ETFs). That will be the catalyst to send prices even higher, beyond the long-term gold-silver ratio.
Certified Gold Exchange has built a reputation as a market leader in silver and as you’re Better Business Bureau A+ supplier of silver coins and other products. Silver prices have already begun their rally so don’t wait any longer and risk getting in after the rest of the market. Call a certified account representative at (800) 300-0715 or by clicking through to How to Buy.