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The price of silver officially posted a new record quarterly closing high in September. While still slightly below the all-time record high of $49.85/ounce, a new quarterly closing high certainly adds another feather to it’s cap. A sustained bullish inflection above $50 would resolve a 45-year classic patterned base formation of the “Cup & Handle” variety and project a measured move to approximately $97/ounce. That seems like a bold forecast — and it is.
But consider the Gold / Silver ratio that we’ve been discussing for many months now. Silver remains cheap relative to gold. The 50-year median exchange ratio is 64. That means silver is still trading at a 19% discount to its median exchange ratio relative to gold. But the swings often exceed the media by a wide margin. If the Gold / Silver were to carry all the way to the lower boundary of the long-term trend channel as it has twice in the past, the the price of silver could conceivably double from here. Thus confirming our initial technical target. Bear in mind that nothing moves in a straight line. As such, a pull-back in prices is to be expected at some point. This would give late-comers a chance to get in at lower prices.
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