• 4 minutes Phase One trade deal, for China it is all about technology war
  • 7 minutes IRAN / USA
  • 11 minutes Shale Oil Fiasco
  • 16 minutes Swedes Think Climate Policy Worst Waste of Taxpayers' Money in 2019
  • 3 hours China's Economy and Subsequent Energy Demand To Decelerate Sharply Through 2024
  • 10 hours What's the Endgame Here?
  • 2 hours US Shale: Technology
  • 4 hours Indonesia Stands Up to China. Will Japan Help?
  • 1 hour Gravity is a scam!
  • 24 hours 10 Rockets hit US Air Base in Iraq
  • 19 hours Canada / Iran
  • 1 day Wind Turbine Blades Not Recyclable
  • 20 hours Remember: Only the Poor Can Reach the Kingdom of God
  • 1 day IRAQ / USA
  • 1 day Tales From The Smoke Shack and beyond.
  • 1 day History’s Largest Mining Operation Is About to Begin
Alt Text

Next Stop $50 for Silver

Silver took a multiyear hit…

Alt Text

Revisiting the First Silver Bubble

As silver prices start to…

Alt Text

A Look at the First Silver Bubble

Silver is showing all the…

Mad Hedge Fund Trader

Mad Hedge Fund Trader

John Thomas, The Mad Hedge Fund Trader is one of today's most successful Hedge Fund Managers and a 40 year veteran of the financial markets.…

More Info

Premium Content

Why Silver Could Outshine Gold

The latest round of risk reduction by global hedge funds bashed silver (SLV), knocking $2.50 off of the $19.50 high seen in the heady days of May.

Today we have made it back to $18.67, indicating that the white metal is holding up far better than it has in past sell offs.

Silver has always been an odd duck in the precious metals world, with half of the demand coming from industrial applications, and the other half coming from monetary demand.

The recent strength suggests this balance is now shifting in favor of the latter, and could have much farther to run. At 67 times, silver is at the bottom end of its historic valuation relative to gold, which has ranged between 12:1 (Remember the Hunt Brothers?) and 70:1.

Geologically, silver is 17 times more common than the yellow metal. All of the gold ever mined is still around, from King Solomon's mine, to Nazi gold bars in Swiss bank vaults, and would fill two and a half Olympic sized swimming pools.

But most of the silver mined has been consumed in various industrial processes, and is sitting at the bottom of toxic waste dumps. Silver did take a multiyear hit when the world shifted from silver based films to digital photography during the nineties.

Now rising standards of living in emerging countries are increasing the demand for silver, especially in areas where there is a strong cultural preference for the jewelry, as in Latin America.

That means we are setting up for a classic supply demand squeeze. I think we could run to the old high of $50/ounce in the next economic cycle, if another monetary crisis doesn't get us there first.

Since silver can trade with double the volatility of gold, this forecast could prove conservative.

You can buy the September futures contract at $19.07, where a 5,000 ounce contract worth $95,350 on the COMEX carries a margin requirement of only $6,750. And if you had any doubt about the long term monetary value of silver, look at the chart below of the silver content of a Roman denarius over 200 years showing a 94% decline.

Silver Content of Roman Denaruis

Courtesy: Mad Hedge Fund Trader




Download The Free Oilprice App Today

Back to homepage




Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News