Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Two Top Reasons Why Silver Is A Must-Have

Commodities / Gold and Silver 2016 Feb 18, 2016 - 10:42 AM GMT

By: Hubert_Moolman

Commodities

The timing of this silver rally relative to the gold silver ratio (GSR).

In the last 100 years, there were three significant silver rallies, with the current one still in progress. Below is a long-term Gold/Silver Ratio chart showing those silver rallies:


I have highlighted the periods during which the silver rallies occurred - from bottom to peak.

Gold/Silver Ratio

  • The silver rally of the 30s started (measured from bottom) before the 1940s major peak of the GSR.
  • The silver rally of the 70s started (measured from bottom) before the 1980 major bottom of the GSR.
  • The current silver rally started (measured from bottom) after the 1991 major peak the GSR.

Although the three rallies have similarities, they are actually radically different, when you look at them relative to the GSR.

The 30s silver rally was not that strong because silver had not bottomed yet (from a long-term point of view), in relation to gold.

Although the rally of the 70s started during a down-trend in the GSR, it was right at the end of the downtrend, as well as closer to the lows than to the highs.

The current rally seems to have started at a "sweet spot". It started just after the beginning of the GSR downtrend, as well as close enough to the highs. This bull market, therefore, has much more energy available for a silver price rise as compared to the previous bull markets. It is much like how cycling downhill is easier than cycling uphill (just visualize it on the chart).

With the ratio even higher than when the silver bull market started; it is a really good time to exchange gold for silver. So, if you understand gold currently to be the ideal investment, then how much more silver?

Silver is probably the best insurance against consequences of the coming debt market collapse

Today's debt levels are massive compared to any previous era. These debt-levels are unsustainable, and we are headed for an inevitable debt collapse.

The US, for example, owes holders of US dollars (world-wide) about 114 771 tonnes of gold as at August 2015 (US monetary base/price of gold per ounce - read more ). That is about 67% to 74% of world gold reserves, depending on which estimate one goes by.

There is no way that the US is able to obtain 67% of all world gold reserves. Even during its best years it was only able to claim a maximum of 22 000 tonnes of gold. Fortunately (for the US), the decree by Nixon in 1971 prevents US dollar holders to claim their gold from the US. Unfortunatley (for the US), the decree will not stop the inevitable bankruptcy. That is the collapse of the US dollar and US bond (debt) market.

Fortunately, silver provides a perfect insurance against this coming debt collapse. This is because silver and debt (such as bonds) have historically moved in opposite directions. If silver is going up, then debt is going down and vice versa.

Below, is a chart of interest on 10 - year treasury bonds, since 1900 to prove this:

10-Year Treasury rates 1900-Present

The blue is the actual interest rate movement, whereas, I have indicated (in grey) how the price of silver has moved almost in union with the interest rates over the long-term.

Alternatively (because the interest rate on a bond moves opposite to the price of the bond), when bonds are going up, then silver is going down, and vice versa.

The fallout from this debt collapse will be devastating - unlike anything seen before. Insurance like silver, against such a terrible and real threat, is a must have.

For more of this kind of analysis on silver and gold, you are welcome to subscribe to my premium service. I have also recently completed a Long-term Silver Fractal Analysis Report .

Warm regards
Hubert

“And it shall come to pass, that whosoever shall call on the name of the Lord shall be saved”

http://hubertmoolman.wordpress.com/

You can email any comments to hubert@hgmandassociates.co.za

© 2016 Copyright Hubert Moolman - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in