"Everything you need to know about gold"
SILVER NOT UNDERPRICED
Silver bulls have for decades made the argument that the white metal is underpriced relative to gold. Their enthusiasm is fueled by expectations for a return to the original fixed ratio of 16:1 in favor of gold.
Using the current gold price of $1925 oz., a return to the ratio of 16:1 would require a silver price of $120 oz. – right now.
NO SILVER LINING
As bad as the prognosticators can be with their predictions for the price of gold, the situation for silver is even worse.
Some very recent headlines trumpeted the following proclamations:
“Silver prices to surge…”
“Silver…Why Prices Will Soar”
“Why You Must Own Silver…”
But my favorite headline expresses all of the emotion and confusion regarding silver quite aptly: “What Is Wrong With Silver?”
IMPLOSIVE SILVER
Admittedly, it must sound encouraging, and even exciting, to hear proclamations that a “silver” lining is now apparent in the metals complex. Or that a silver “blast-off (is) about to happen”.
Expectations abound for the long-expected, vertical leap in silver prices that never seems to come. And we are told it is supported by solid fundamentals that include supply deficits, a return to the 16 to 1 gold/silver ratio, increasing monetary demand for silver, etc.
A 16-to-1 gold to silver ratio has been the Holy Grail of some silver investors since the mid-sixties.
Unfortunately, fifty years later, it is a quest that continues unabated without success.
In fact, there is evidence that contradicts and widens the chasm that separates wishful thinking from reality.
HI YO SILVER!
In January, 1980 silver peaked at close to $50.00 per ounce and gold hit its high point of approximately $850.00 per ounce. Thirty-one years later, in 2011, both metals again reached lofty levels.
For gold, the new high point was $1900.00 per ounce. For silver, the number was $50.00 per ounce; again.
Six years later, as of this writing, gold is priced at $1260.00 per ounce. Silver is at $17.00 per ounce and change.
Over the entire thirty-seven year period, gold is forty-eight percent higher than its January, 1980 peak price; whereas, silver is sixty-six percent lower.