Gold and Silver (11/04/07)

The following quote is from Chris Weber a well respected and sometimes futuristic thinker in the market advisory business.
"If I felt I didn't have enough in the gold or silver area, I would put the cash there.
Only two months ago gold was under $650. This week, it touched $794. Before this bull market is over – and I see it lasting well into the next decade, the 'teens – it would not surprise me to see gold at $3,000 and silver at $187.50. For silver, this would require a 1,211% increase from today's price, versus a 277% increase for gold. "

Now, even if he is only half right where do you think the gold and silver stocks will go?
Please reread my previous postings on gold and silver and it is still not too late to own and buy gold and silver stocks.

I want to do some historical predicting here so you see why I have been so bullish on the metals for a long time.
Gold and silver are reactive safe havens for inflation. That means people will buy gold and silver after inflation has started to go up.
Inflation erodes the value of your dollar therefore gold and silver are historically the only currency that is still in existence for the past 5000 years. And it still will be for another 5000 years. You say you won't live that long, true.
Now for some comparisons.
Copper's previous historical high $1.60 per pound. Now it's high was $4.00 per lb.
Notice the ratio of 4 divided by 1.6 = 2.5
Oil's previous all time high was October 1990 at $41 per barrel during Desert Storm.
Where is oil headed as we go to the pumps paying more than $3.00 per gallon going to $4.00 eventually.
Multiply 2.5 times $41 - $102.50 per barrel. We are only 6% away from that number.
Oil will have a hard time surpassing the $100 per barrel number due to the psychological barrier of people.

Now for my prediction. Golds previos high was 873 on Jan 21 1980. Take the 2.5 ratio and multiply it to 873 = 2182.
$2182 per ounce of gold. Therefore if you read $2000 for gold they are not that far off.
Silver has always had a ratio of 32 to 1 to gold on the average. So divide 2182 by 32 = $68 per ounce.
Now silver is $15 per ounce divide that into $68 = 4.5 ratio.
Gold is at $810 per ounce divide that into 2182 = 2.7 ratio.
Gold is the first to move towards its ultimate peak in the next 2.2 years and silver will follow close behind.
But silver will appreciate twice as much as gold in the scheme of the total picture.
Happy investing.
Buy GLD, SLV, GG, SSRI, CDE, AAUK, AUY, PAAS, SIL, ABX, NEM, IAG, GRS, and any other precious metals stock that you want to own.


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