Tuesday, July 19, 2011

Is Silver's Potential Capped at $100 in this Bull Run?

John Embry's piece today on KWN had Embry calling for silver to potentially reach triple digits before this thing is over.
While we highly respect Embry, this is such an understatement it could be considered bearish!  Silver has the potential to reach $100 in the next 12 months without a currency event such as hyperinflation or US dollar collapse. 
Throw in a major currency event in the USD, another 5-10 years of gains, plus a public mania phase at the end of the run before the silver bull exhausts itself, and we are looking at the potential for MUCH HIGHER silver prices long term than $100. (although to be fair, Embry doesn't qualify his expectations for triple digits, leaving himself open to the $100-$999 range)

To view silver from the perspective of our viewpoint- the King of the precious metals community, Jim Sinclair, is now calling for $12,500 gold.  A return to the historic 16:1 silver/gold ratio at this gold price = $781.25 silver.  Personally, we think its highly unlikely that silver will not overrun this historic AVERAGE ratio. 
We think it is likely that silver will overrun up to 5:1 AT A MINIMUM. 
(We'll be conservative and not-publish our true thoughts on what the gold/silver ratio has the potential of reaching). 
Silver gurus such as Ted Butler, Izzy Friedman, Jason Hommel, and Bix Weir all expect silver to surpass gold in coming years due to consumption of silver.
Temporary parity while a long-shot, remains a viable possibility.  Plug in your own expected g/s ratios at $12,500 gold- and let us know what you come up with. 

Click here for John Embry's interview with KWN: