Sunday, 4 March 2012

Silver: Some views from Sean Rakhimov.

1.  Gold and silver are the only markets driven by fear, and fear usually does not emanate from the metals, but from other areas. A lot of the other assets are driven by greed.

2.  Silver does display a high degree of volatility and I believe its fundamentals are far superior to those of gold due both to its industrial usage as well as price. Silver is far cheaper than gold and a lot of investment has been switching over to silver. For instance, Sprott says it sells equal amounts of silver (in dollar terms) to gold, which means in today's numbers, silver is selling 50 times more in ounces than gold.

3.  I do think that the gold:silver ratio will get below 20, probably closer to 10:1. It's over 50:1 right now; so, that should be a good guideline.

4.  Generally speaking, though, with silver, we are probably somewhere midway through the cycle and have another 10 years to go. Investors should constantly revisit their reasons for being in this space and what exactly they are looking to get from it. I think there's nothing to worry about in the volatile price action. Silver is about the most volatile asset that you can be in. Other than that, I think it is up and up from here.

Read complete article: here.

For quite a while now, I have not really talked about gold, preferring to look at silver because I think the upside for silver is far superior to that of gold over the longer term. I also blogged about the gold:silver ratio before.

Accumulating more silver if its price should test supports would be a good idea.

Related posts:
1. Gold or silver?
2. Buy more silver on weakness.