Wednesday, February 14, 2007

Silver - Gold - Housing

Big investment money has moved into almost every free or even semi-free nation on earth. For instance, China has massive investments in Taiwan, Taiwan has major investments in China, Dutch private interests have large investments in Africa, US private interests have investments almost everywhere -- and so it goes, big money, private money, powerful money -- crisscrossing the economies of the world.

Again it's a case of follow the money. And there's almost no place today where big money, corporate money, private money, is not involved. Nations and individuals don't like to jeopardize their investment, and nations are run by powerful men. Behind every nation you'll usually find men who are quietly "pulling the strings."

I believe that globalization of investments will prove to be a major barrier to war. As an example, US corporations now have huge investments in China. For this reason, regardless of political arguments that we may read about in the newspapers, I consider it almost unthinkable that the US would engage in war with China. There's just too much money involved and at stake. And never before in history has money been so globalized. I think it's a good thing; I think it favors international safety.

Now I want to talk about silver. Silver is a much-wanted metal. Unlike gold, silver is both used and used-up in industry. Silver is a great conductor of electricity. Silver, in the past, has been a monetary metal. The dollar was originally defined in terms of silver, not gold. Silver has been in deficit for the last six years, meaning that more silver has been used than produced. The world needs more silver. The US government's stock pile of silver, once enormous, is now gone.

Silver is heavy, but it is not as heavy as gold or platinum. If you've ever picked up a hundred-ounce bar of silver you know that it's heavy. Which means that large quantities of silver are difficult to handle and difficult to store. But now there's an Exchange Traded Fund under the symbol SLV. This fund actually puts away silver when you buy its shares. In a phrase, SLV is the easy way to own actual silver.

The silver chart pattern is bullish long-term, secondary-term and near-term.

Back in the frenzied days of the late-1980s silver rose as high as 50. That's better than three times the current price of silver. Personally, it wouldn't surprise me to see silver move up to 50 again as the great bull market in precious metals moves on. I've shown on previous sites that silver is outperforming gold. If gold rises, silver rises more in terms of percentages.

I think silver as a metal is cheap today, cheap compared with gold and cheap compared with platinum and, well, just plain cheap. A good value.

Back in December 1999 one ounce of gold would buy only 15 ounces of silver. Then the ratio swung in favor of gold, and by February 2001 one ounce of gold would buy 94 ounces of silver. But since February of 2001 silver has been gaining on gold. As of yesterday, one ounce of gold would buy 47.7 ounces of gold. I think we're heading for a ratio of at least 1 to 25, meaning that one ounce of gold will buy only 25 ounces of silver.


Powerful market today, and this kind of strength with all three D-J Averages at new record highs doesn't usually reverse in a hurry. The is a worldwide phenomenon with markets in almost every country heading higher.

Silver and gold are really still in their bases. The excitement in precious metals lies ahead. This is still the accumulation stage. I bought more SLV yesterday and again today. In precious metals, this is the time to think in terms of ounces, not price.

3 Comments:

Blogger vfsv said...

This comment has been removed by a blog administrator.

9:10 AM  
Anonymous Anonymous said...

The gold:silver ratio was not 15 in 1999. Gold was $280/oz and silver was $5/oz. This is ~50:1, not 15:1.

I don't believe it has ever been that low, at least not since gold was allowed to float.

6:07 PM  
Anonymous Anonymous said...

>>"If you've ever picked up a hundred-ounce bar of silver you know that it's heavy."

Damn, it must weigh, what? 100 ounces?

2:38 PM  

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