The Unbelieveable Bargain of Silver
I wish I had the time just now to lay down the full investment rationale for silver. Hopefully, those of you who have been here for a while have read my rationale before. In the few seconds that I do have, let me just point out something.
After a couple of weeks where silver had started to close the enormous relative gap between the valuations of gold vs. silver, it has again fallen behind gold's explosive trajectory, and today trades at a wholly unsustainable ratio of 63:1.
Silver traded above $20 when gold first moved over $1,000 in March 2008, and at the time I touted the gold:silver ratio of 50:1 as itself entirely unsustainable and reflective of a relative bargain in silver. I was not wrong ... thbis is a long-term phenomenon, and the timing of when silver will move towards more reasonable ratios of 40:1 and eventually 30:1 are anyone's guess ... but it will happen.
Keep a close eye on the USD .. if it stays convincingly below 75, then we have significant continuation of this run in the works. The reason ... everyone knows there is no support for the USD here, and will rush to protect themselves from an accelerating decline. The USDX needs to take out 76 to have a chance of causing gold to pause, and at the moment that isn't looking very likely. I think we'll easily take out $1,200 or $1,250 in this move. Significantly higher prices are possible too before a pullback, but personally I'd rather see a pullback sooner rather than later to reduce volatility. If this carries on for much longer without interruption, volatility could creep in and discourage even more wary investors from protecting themselves with gold.
To sum up my original point, a natural price for silver corresponding to today's gold price would be well abive $25. The fact that silver remains below $20 is a market dislocation ... an anamoly that I encourage Fools to pounce upon. The downside risk for silver if gold pulls back is not as great as it has been during past gold breakouts, and the long-term prospects for silver are incredible. Remember, I'm targeting a $50 minimum for silver during this bull market, but can also conceive of the possibility that silver could reach triple digits.
If gold is feeling expensive to you, even though it is not, then consider the greater bargain: silver.