Wednesday, 31 August 2011

Hi Ho Silver #2

I post Hi Ho Silver in May where Peter Schiff was talking $50.

Yesterday Dr Alex Cowie put forward his arguments in a piece titled Silver may be better bet than gold.

Both gold and silver have made big moves higher so far this year, but silver’s gains of more than 30% year to date are more impressive than gold’s 25% climb and, likely, will continue to be.

“Own gold and silver as soon as you can,” Alex Cowie, editor of Diggers and Drillers, said in a recent report for Daily Reckoning Australia. But “I would choose silver over gold.”


According to Cowie, the Commitment of Traders report “says buy silver.” The fewer open positions on silver there are, the more bullish the set up because there are “loads of potential buyers out there who haven’t entered the market,” he explained.

The gold-to-silver ratio also favors silver, he said. Gold is roughly 15 times more rare than silver in nature and right now, you need about 44 ounces of silver to buy one ounce of gold. That ratio is heading back to where it belongs and could close in on its long-term mean of 15. At the same time, there’s no more silver to spare and investment demand for the white metal is soaring, said Cowie.

“There isn’t even enough silver bullion in the world to supply one ounce per Chinese citizen,” he said. “It doesn’t take much imagination to see where this is heading.”

A GoldSilver Ratio of 15 puts Silver at $120 based on Gold's current price.

A swath of GoldSilver charts can be found here: Gold Silver Ratio History Charts

On that other barbarous relic....American now prefer Gold over Stocks and Real Estate as long term investment. As the US Fed and other Central Banksters continue to keep interest rates at zero or negative*, the relics won't lose their lustre as a safe haven.

*Bank of New York Mellon Corp. on Thursday took the extraordinary step of telling large clients it will charge them to hold cash.

*ZURICH—In a sign of mounting tension caused by the strong Swiss franc, UBS AG said it may begin levying a temporary charge on Swiss franc deposits as a way of encouraging other banks to limit the cash they keep in the surging currency.

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