As Central Bankers unleash a generational perfect storm for gold, a significant valuation gap between the gold price and silver is forming.
The present gold price is indicative of a $19 silver price. And with silver trading at $14.71, silver is undervalued by nearly 30% to gold.
Even conceding that gold may have better supply:demand fundamentals, silver is still very attractive to gold.
Looking at a ten year chart of the Silver to Gold Ratio, you can see how undervalued silver presently is, even with silver establishing a new bullish uptrend vs. gold.
As gold nears potential technical resistance and profit taking, look for traders to begin backing and filling into silver and silver stocks.
As I type, silver is up double the gold move this morning. And silver stocks PAAS, SLW, and HL are leading the GDX gold stock ETF.
SliderOnTheBlack
3 responses so far ↓
1 mike // May 22, 2009 at 10:52 am
Slider, just want to thank you for HL NG picks…..and yes silver will go up.
2 Bob // May 27, 2009 at 7:57 pm
Hi Slider.
Re: large/ increasing short position by large players on the comex - how do you read this confusing situation?
http://news.silverseek.com/TedButler/1243360187.php
Thanks - for All you do.
3 SliderOnTheBlack // Jun 3, 2009 at 10:14 am
re: Ted Butler’s comments…
“The 4 big shorts accounted for all the new short selling in silver and nearly all the new short selling in gold, and that includes all the other traders in every category - commercial, non-commercial, and non-reporting. Both before the recent rally commenced and since, there would be no commercial short position, at all, in silver and a tiny total commercial short position in gold, were it not for the four large traders. A very few big traders exist on one side of the market - the classic hallmark of manipulation. Nothing new here.”
The last sentence may be the most important.
Anticipate the smackdowns. And since the bankster-gangsters are still in control of the game you have two choices…
You can either use them, or be used by them.
Buy some puts for insurance when we get these parabolic rallies, and make some money in both directions. Get paid by the smackdowns.
Don’t be afraid of taking profits into strength.
Scale out into strength, just as you would scale in, into weakness.
The last 3 years have been dominated by long drawn out trading ranges, followed by hard, fast moves on both the rallies, and the corrections.
When you take profits into these rallies, take “some” of the money and buy some deep out of the money calls.
Your exposure is minimized, your risk is clearly defined, and you retain leveraged upside to any remaining move.
Hope that helps,
SOTB
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