Subject:Buying Silver Is Like Buying Gold At $554 Today By: Hubert Moolman
Overview: I think that buying silver today is like buying gold for $554 an ounce. Let me explain: As I am writing, silver is currently trading at about 65.2% (32.6/50) of its 1980 high. If gold was trading at 65.2% of its 1980 high, it would be trading at $554 (0.652*850).
hubert, I think people that compare the silver/gold market of 1980 to today are making a mistake. In the prior run up to $50, one person tried to corner the silver market creating a severe supply/demand imbalance in silver. There was no such factor at work in the gold market at that time, so the gold/silver ratio was then being manipulated lower by the Hunts. Presently no one is trying to corner the silver market. While Sprott adding another $1.5 billion to PSLV and urging miners to hold reserves in physical metal may come to put similar pressure on the silver market in the future, I think 1980 and 2011 are very different siuations in terms of the gold/silver ratio.
Kaliahk...Hubert makes several good points. On the otherhand, some of your objections are not valid. For instance, it was two Hunt Brothers buying silver not one. Also their buying of silver did not bring the gold silver ratio down until 1979 at 14/1, when there were several big corporate buyers coming in behind the Hunts buying silver.
The Gold/Silver ration in 1970 was 22/1. The Hunts started buying silver in 1973... at that time the ratio climbed to 32/1. The next year in 1974 the ratio went to 37/1. By 1975 it climbed further to 39/1. In 1976 it fell to 30/1 then in 1977 31/1 and in 1978 it went higher to 32/1. With all the so called huge buying by the HUNT BROTHERS could not get silver to fall below 30/1. Remember, before the Hunts started buying the gold/silver ratio was 22/1.
Lastly, the buying of the Hunt Brothers in the 1970's will be a DROP IN THE BUCKET compared to all the future buying coming from ASIA, EUROPE, MIDDLE EAST, RUSSIA and the UNITED STATES.