Saturday, August 6, 2011

Q&A With The Doc: What is Your Long Term Silver Target?

King writes:
I'm relatively new to this site, but it's fast becoming one of my favorites. Just wondering, what is your price target for silver within 4-5 years?
Also, I'm massively long physical silver living here in Asia and sometimes its discouraging watching these banksters take down the price at their will. It also seems that the May 1st smackdown did alot of damage and silver can't seem to muster enough OI to make a run to 50.
What words of encouragement do you have for someone like myself?

First of all, thank you for your kind words regarding the site.  We hope you continue to enjoy it.
Regarding my long term silver price target- I make it a rule not to publicize or publish my personal long term price outlook for silver as it is so bullish it would be ridiculed even by the average silver bug.
Lets suffice to say that I expect Sinclair's gold call of $12,500 to be easily met, and I also expect silver to EASILY HIT AT A MINIMUM a 5:1 ratio to gold before this bull is over.
I guess that makes my published target $2,500, although personally I believe silver can run higher than a 5:1 ratio vs. gold short term when the silver manipulation implodes.

I agree completely with your assessment that the cartel's May drive-by shooting of silver has done short term damage to silver, and open interest currently refuses to rise like it did in April.
As far as encouragement- this is a short term situation, and will be overcome by time (and QE3).
Think back to silver's price action after the severe 2008 takedown from $21+ to $8. Silver rebounded in early 2009 to $14-$15, then basically consolidated/range traded for a full 15 months between $14 and $18 on the upside.
Silver has periods of extreme volatility, and can then consolidate for longer than many will tolerate.
While I do not expect silver to consolidate this time for as long as it did after the 2008 take-down (silver has broken out past $41 today, which I have been anticipating will lead to a run back to the mid-$40's barring another cartel attack) use the consolidation periods to continue to accumulate physical silver.
While it is exciting to watch silver run to new highs day after day, realize that your fiat dollars will purchase fewer ounces of silver the higher the price runs.
As silver's long term outlook is multiples higher from current values in our expectation, the longer silver consolidates and remains at lower levels, the better-as far as our accumulation is concerned.

Hang in there King, and have patience.
Silverbugs all want to see silver hit the moon tomorrow.
One of these days it will, but until then, continue to accumulate and have faith. 
Nothing has changed.