Governments continue to apply the only solution they know, which is to print money in order to prevent their economies from completely collapsing. But money printing will not save any of these desperate countries. March could be the turning point for the equity markets as we go into the debt ceiling and sequestration debate. This will definitely bring volatility back into market with potential for silver and gold to break out from their recent lows.
History shows a 1/16 ratio within Gold and Silver, which actually is based on the natural availability of the two metals in the soil of the earth. This simply means that there is 16 times more Silver than there is Gold available. Looking at the prices in today’s market gives you a 1/53 ratio which gives Silver historically seen a huge potential to the upside.
Industrial wise companies experiencing huge shortages in the Silver market. Just to mention to two most frequent cases of shortages in the Silver market:
– An Apple contractor who claimed that Apple has delayed production on the new 27″ iMacs due to an industrial silver shortage in China.
– One of the most famous German automakers is hoarding massive amounts of physical silver inside one of the most secure vaults in Zurich, Switzerland.
All this for the simple reason that Silver is not a “Just In Time” product anymore.
It doesn’t really matter how much manipulation or money printing is surrounding our economy, because it is fundamentals that will prevail in the very end . My personal target for Silver into 2013, taking into accounts all of the above fundamentals, will be to take out the highs of 2011 and from there it will continue to go higher above that $48 high in order to set new highs. For Silver to go back at its fundamental historical ratio it needs to get to $100 per ounce, based on current levels.
For more information regarding the Silver and Gold market and their fundamental relationship with the economy, search the following names as they are professionals fluent in the market: Eric Sprott, James Turk, Egon von Greyerz and Peter Schiff.
Looking at the 5 year chart of Silver ETF SLV will give you a strong uptrend into the future. Right now we are testing the lows on that trend, but with the RSI in oversold territory there is a higher probality of bouncing of these lows right back to the resitence level of $31.50
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Sven Tongeren
KOTM Contributor
sven@keeneonthemarket.com
The 6 months chart will give a more sophisticated view. We need to hold that red support line in order to continue the upward trend.
