In fact, I think there's even a decent chance gold could reach $10,000, which is just five times last August's peak. That's just 2.5 times last August's peak near $2,000. And given the inflationary path we're on, I think gold could peak at $5,000 per ounce. I believe the ratio will ultimately reach a low near 15. But there are some indicators worth examining for clues and suggestions. So the current action is particularly exciting for silver.īut what does it all mean for how high the silver price can go? Of course, no one knows for sure. Consider that we know from history silver always outperforms gold in precious metals bull markets. It then rose almost constantly up to its all-time peak last March at 125, then fell dramatically to its current level around 67, as silver started to significantly outpace gold. At silver's peak in 2011, the ratio bottomed near 33. Now let's examine the gold-silver ratio action since 2001.Īgain we see peaks and troughs tend to occur (though not exclusively) around recessions (gray bars). It had a tremendous move up to $30 within just five months and has been mostly consolidating since. It then corrected until late 2015, then moved sideways until bottoming near $12 last year in March. Of course, silver had a tremendous run from $4.20 in 2001 to its 2011 peak at $49. The following chart shows us silver prices since 2000, not adjusted for inflation. Let's now move to the current silver bull market that I believe began in 2001.
What's also interesting is that when silver reached its peak in 1980, the gold-silver ratio ultimately bottomed around the same time at a level near 15, which was below the starting point near 20.
To me it's very intriguing to note how recessions, which are the grey vertical bars, tended to mark troughs and/or peaks in the ratio. Here's a chart of the gold silver ratio during the 1970s silver bull market. The most bullish scenario is when the ratio is falling from a high level, ideally from above 80, and the silver price is rising. Naturally the higher the ratio, the more silver ounces are needed to buy one gold ounce, and vice versa. So, the fundamental side of silver demand is looking strong, but the technical side is also very bullish.Īs a quick refresher, the gold-silver ratio is calculated by simply dividing the spot price for one gold ounce by the spot price of one silver ounce. According to the Silver Institute, total supply will rise by 8% this year, though total demand will rise nearly twice as much, by 15%, led by industrial, jewelry and physical demand. What's more, according to Metals Focus, silver supply was down 4% in 2020 by 42 million ounces. With unprecedented economic stimulus programs, many favoring green energy, silver is uniquely positioned to profit. Silver in particular has the added benefit of 50% of its demand being industrial. Couple that with many countries borrowing to meet interest payments, and central banks soaking up much of that new sovereign debt, and inflation havens like precious metals gain strong appeal. The Institute of International Finance explains how the COVID-19 pandemic response added $24 trillion to the global debt mountain last year, to reach a new all-time record high of $281 trillion.Īnd interest rates being maintained at 5,000-year lows will only encourage more debt. This now looks to have become a permanent state, at least until we reach some sort of global financial reset.
Most developed and many developing nations have been in multi-year or even multi-decade deficit scenarios. However, I think this bull market could be an order of magnitude larger for a number of reasons, the main ones being debt, credit and money printing.Īs a result, I think silver's ultimate peak could be $300, and I won't rule out possibly even higher. If we consider that silver was priced at $4.20 in late 2001, a 37x return would take it to about $155. By the time it reached its peak in 1980, silver had run all the way up to $49. You see, when silver went through its 1970s bull market, it started from a low of $1.31 in October 1971. After all, it's a metal that's known for massive rallies. I know this might sound ridiculous to some, but I think silver could reach $300.
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