Silver Prepares for Next Leg Higher
Silver must begin to move dramatically higher in order to close this price disparity between the value of Gold to Silver…
Following up on some of our recent metals research, we wanted to alert our friends and followers to the incredible opportunity that still exists in Silver. We’ve highlighted two of our more recent articles for reference and review, below. Silver continues to be one of the most incredible opportunities for 2020 and Silver Miners (SIL) could explode to the upside as the price of Silver rallies to close the gap between the Gold to Silver ratio.
Our researchers believe Silver is currently undervalued, compared to Gold, by at least 240%. Historically, the Gold to Silver ratio averages a 10+ year rotational range of between 63 to 67. This means that through both peaks and troughs, ranging from the high 80s to mid-90s to the low 30s to mid-40s, on average the middle price range level for this ratio is near 65. Currently, this Gold to Silver ratio is 88.4.
Gold is currently trading at $1590 – just below the recent peak near $1613. We believe that Gold will continue to rally higher, breaking the $1613 level, and continue higher targeting the $1750 level over the next few months. Eventually, within 2020, we believe Gold will continue to rally higher breaking the $2100 price level.
This continued upside price action in Gold, while Silver has really yet to see any massive upside price movement, continues to create a massive price disparity between Gold and Silver – which is highlighted in the Gold to Silver ratio. As Gold rallies, Silver must begin to move dramatically higher in order to close this price disparity between the value of Gold to Silver. Historically, we believe the rally in Silver will force the Gold to Silver Ratio to fall to near the 65 level. This would represent a massive 70% to 120%+ rally in the price of silver – targeting $24.50 to 32.50.
GOLD AND SILVER RATIO WEEKLY CHART
If the Gold to Silver Ratio falls below the 65 level and targets lower ratios, as has happened in the past, then Silver may rally as high as $45 to $55 per ounce while Gold stays below $1800. If Gold does rally above $2000, as we expect, the true potential for Silver experiencing a major price reversion event could be as high as $60+ per ounce.
Please take a minute to read some of our previous research posts regarding the metals markets here:
January 14, 2020: SILVER TRADERS BIG TREND ANALYSIS – PART II
December 30, 2019: METALS & MINERS PREPARE FOR AN EARLY 2020 LIFTOFF
DAILY PRICE OF SILVER CHART
This Daily Silver chart highlights what we believe will be the next move higher in Silver. The next upside price advance should target the $21 to $23 level as Silver attempts to revalue compared to the price of Gold. Near this $23 level, Silver should stall briefly before attempting to move much higher. The reality is that once this revaluation event begins to take place in Silver, we believe it will prompt an extended price rally that could last well into 2023-2024.
PRICE OF SILVER WEEKLY CHART
This Weekly Silver chart highlights our research team’s expectations related to Silver over the next 6+ months. At first, we believe the $21 to $23 level will become the target. Then, a short period of price rotation will find support near $21 before another upside price leg pushes silver above $24. Remember, if Gold continues to rally higher, these expectations could extend 5% to 10% in size and scale.
SILVER MINERS SECTOR ETF – WEEKLY CHART
Another key component of this move is the opportunity in Silver Miners. This SIL Weekly chart highlights the real potential for a 20% to 30% upside price rally related to the expected price revaluation/reversion event we have been describing for Silver. Miners are an excellent correlative component for skilled traders expecting a move like this in the metals market.
Learn how we can help you find and execute better trades and turn the extreme volatility into solid profits. Read our research and see what our research team has been predicting over the past few months. We dedicate our efforts to helping you find great trades and helping you protect your assets.
John Hathaway joined Sprott Asset Management in January 2020. Mr. Hathaway is a Portfolio Manager of Sprott Hathaway Special Situations Strategy and Co-Portfolio Manager of the Sprott Gold Equity Fund. Previously, Mr. Hathaway joined Tocqueville Asset Management L.P. in 1997 where he was a Co-Portfolio Manager of the Tocqueville Gold Fund as well as other investment vehicles in the Tocqueville Gold Equity Strategy. He was also the Portfolio Manager of private funds. Prior to joining Tocqueville, Mr. Hathaway co-founded and managed Hudson Capital Advisors followed by seven years with Oak Hall Advisors as the Chief Investment Officer in 1986. In 1976, he joined the investment advisory firm David J. Greene and Company, where he became a Partner. Mr. Hathaway began his career in 1970 as an Equity Analyst with Spencer Trask & Co. Mr. Hathaway earned a B.A. from Harvard College and an MBA from the University of Virginia. Mr. Hathaway was also the Chairman of Tocqueville Management Corporation, the General Partner of Tocqueville. He also holds the CFA® designation.
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