Diversify With Silver As Set To 'Increase 400% In 3 Years'

GoldCore's picture


Diversify With Silver As Set To 'Increase 400% In 3 Years'

Silver remains the most under appreciated and under reported on asset in the world despite continuing positive fundamentals.

The Telegraph published an unusually bullish article on silver yesterday which suggests that silver might rise by over five times in the next few years.

Emma Wall interviews fund manager Ian Williams who says that "silver is about to enter a sustained bull market that will take the price from the current level of $32 an ounce to $165 an ounce and we expect this price to be hit at the end of October 2015."

"This forecast is based entirely using technical & cyclical analysis and is in keeping with the mathematical form displayed so far in the bull run that has taken silver from $8/oz in 2008 to its current price of $32 an ounce – having hit $50 an ounce in 2011."

Mr Williams noted that the silver price was more volatile than gold, but that he predicts silver to continue to dramatically outperform gold.

The Charteris manager said that macro fundamentals were supportive for the silver price, such as the re-election of President Obama, who supports Ben Bernanke's policy of quantitative easing.

"Strong demand for precious metals will remain as long as we have QE, which do well with each round of money printing. QE is bound to lead to inflation at some point and at that time, real assets will do best," he said.

"Investing in a fund that holds a range of precious metals gives you positive diversification and less reliance on just gold."

We have long been more bullish on silver than on gold and have said since 2003 that silver will likely reach its inflation adjusted high of $150/oz in the coming years. Indeed, we believe that the end of the precious metal bull markets may see the gold silver ratio return to its geological long term average of 15:1. 

Therefore were gold to trade at over its inflation adjusted high of $2,500/oz (as we believe likely) then silver  would be priced at $166.66/oz or $2,500/oz divided by 15.

We have also long suggested that owning both gold and silver was sensible from a diversification point of view. Gold is more of a safe haven asset and currency in general and is more of a hedge against macroeconomic and monetary risk.

Silver is similar, while more volatile, but continues to have the potential for far higher returns.  

For breaking news and commentary on financial markets and gold, follow us on Twitter.        

(Bloomberg) -- Gold to Climb to $1,849, LBMA Survey Shows, as Outlook Cut
Gold will probably gain 7 percent to $1,849 by September, according to the average response in a survey of attendees at the London Bullion Market Association’s annual conference, who cut predictions during the two-day event.

Attendees said in a separate survey yesterday that the metal may trade at $1,914 an ounce by the LBMA’s next annual gathering in 10 months, according to Tom Kendall, head of precious-metals research at Credit Suisse Group AG, who presented the findings in Hong Kong today. Rallies were also forecast for silver and platinum, the results showed.

While gold is poised for a 12th year of gains as central banks including the U.S. Federal Reserve ramp up stimulus, it’s 10 percent below the all-time high reached last year. Gold may surpass $1,800 this year depending on further actions from the Fed, according to Kendall, the most accurate precious-metals forecaster in the past eight quarters tracked by Bloomberg. Goldman Sachs Group Inc. expects gold futures to gain to $1,940 an ounce in 12 months, according to a report dated Nov. 9.

“The price can trend a little bit higher,” Kendall said in an interview on Nov. 11. “It’s going to be a market that needs fresh stimulus or a new geopolitical headline to get investors really excited about gold again.”

Gold for immediate delivery declined as much as 0.4 percent to $1,721.55 an ounce and traded at $1,724.95 at 5:33 p.m. in Hong Kong. Spot gold reached an all-time high of $1,921.15 on Sept. 6, 2011.

Montreal Call
At the LBMA’s last annual gathering, held in Montreal in September 2011, the average response in the final survey was for a rally to $2,019 by the time of the Hong Kong meeting. After the results was released on Sept. 20 that year, the highest that gold reached was $1,816.70, touched the following day.

Silver will probably climb to $38.40 an ounce by September, according to the survey today, from $32.27 now. Platinum may advance 14 percent to $1,794.90 an ounce, while palladium may gain 18 percent to $724.70 an ounce, the results showed.

The Fed said on Oct. 24 it will maintain $40 billion in monthly purchases of mortgage debt and probably hold interest rates near zero until 2015 to spur growth and reduce joblessness. The Bank of Japan expanded an asset-purchase program on Oct. 30 for the second time in two months and the European Central Bank has said that it is ready to buy bonds of indebted nations.

“Next year it’s reasonable to be talking about a gold price of between $1,800 and $2,000,” said Kendall. For the metal to reach the “top end of that range, it will require investors to become more engaged in the gold market again, particularly on the institutional side.”

Holdings in gold-backed exchange-traded products were unchanged at 2,594.6 metric tons yesterday after reaching a record 2,596.1 tons on Nov. 8, data compiled by Bloomberg show. They have risen 10 percent this year.

The LBMA is a London-based group that represents the wholesale market for gold and silver.

(Bloomberg) -- Gold Mining Breakeven Costs Are Increasing, Barrick CEO Says
The breakeven cost for mining gold is going up on so-called resource nationalization, a shortage of skilled labor, infrastructure access to remote mines and rising capital expenditures, Jamie Sokalsky, CEO of Barrick, said at a conference in Hong Kong today.

(Bloomberg) -- Gold Bull Market Shows No Signs of Reversing, Barrick CEO Says
The gold bull market shows no signs of reversing, Jamie Sokalsky, ceo of Barrick Gold Corp., said at a conference in Hong Kong today.

Mine supply hasn’t kept up with demand as production is declining in mature areas and costs are increasing, he said.

(Bloomberg) -- Russia’s Palladium Sales Seen Dropping to 250,000 Ounces in 2012
Sales from palladium stockpiles in the country may be lower or zero next year, Mark Danks, marketing manager at Johnson Matthey, says in Moscow. *NOTE: Russia’s palladium sales from stockpiles were 770,000 oz in 2011.

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billsbest's picture
Silver`s outperformance over gold to be staggering long term - Ted Butler


nofluer's picture

QE is bound to lead to inflation at some point...

Investing in a fund...


Who IS this Williams guy?

Inflation? REALLY??? Ahhhh.... come on. He's just joshing us. (SOMEONE hasn't been paying attention - or only reads the numbers put out by the Bernank... We've been running at about 20% food and fuel inflation annually for three years. And that's a conservative estimate based on a small market basket.)

A PM FUND!!!??? A FUND??? I bet this guy likes to wear tennis shoes in rattlesnake country. He's obviously not someone I'd trust with any savings I had - or that I'd advise a client to listen to.


Jendrzejczyk's picture

If you start a comment with a quote, we can't green arrow you.

Sigep0612's picture

Buy hard assets...period!!!   Think Barter.  Big Banks are doing the governments dirty work by hedging gold and silver to maintain the strength of the dollar.   The current crisis re the fiscal cliff is a perfect example.  If the world is so concerned about the US fiscal cliff why isn't there a rise in PM's?  The bigger picture is when the dollar is no longer the reserve currency.   It's coming soon to a city near you.   When China, Russia, Brazil circumvent the Dollar and transact in their own currencies....watch out.  The dumbing down of America started several decades ago and has multiplied dramatically over the past several years.   

If anxiety, tension, entitlement mentality, financial illiteracy and lack of personal responsiblity are the new norms how does America move forward?   Society doesn't question anymore.  The equity in our homes was created by big bank telling us to take more risk (we voluntarily bought into it) and now that the equity evaporated and the debt remains, it's someone else's fault.  Today, Apple is telling us that we  can not possibly live without an I-Pad and we've bought into it only to be duped by the next great Apple product; Government is telling us that we can not possibly survive in this wild world (that can not produce jobs) without a college degree (so we increase our debts and after graduation go home to live with Mom and Dad), and GM tells us to lease a car for only $499 a month (because they use the word ONLY).  It goes on and on. Is the dumb down reversible? What happened to common sense thinking, hard work, accountability, personal sacrifice, and integrity? Has immediate gratification replaced thoughts of long term success?  

The best hard assets....Gold, Silver, and Scotch (I prefer Blue Label).....not necessarily in that order.       

nofluer's picture

When China, Russia, Brazil circumvent the Dollar and transact in their own currencies


Already happening...

johnnymustardseed's picture

Ian Williams who says that "silver is about to enter a sustained bull market that will take the price from the current level of $32 an ounce to $165 an ounce and we expect this price to be hit at the end of October 2015."

Don't get me wrong, I want to believe that, but until something like Blythe Masters falling over dead, I won't count on it

Tombstone's picture

When gold and silver prices go ballistic, the government will then confiscate it to help pay for their welfare/socialist dream state of hell.  If you are not one of those selected to be a rich elitist Kommie, you will have to be a slave like everyone else.  And a very poor one at that.

CrockettAlmanac.com's picture

Don't you mean that the government will attempt to confiscate it?


From the ZH archive:


As for the process the government had in place to deal with those who refused to voluntarily hand over their gold quietly, curiously there was only one case of prosecution, which however should make it very clear that holding gold in "authorized" bank safes is about the dumbest thing one can do the next time the US government decides to devalue the dollar, and change the rules.


The circumstances of the case were that a New York attorney, Frederick Barber Campbell, had on deposit at Chase National over 5,000 troy ounces (160 kg) of gold. When Campbell attempted to withdraw the gold Chase refused and Campbell sued Chase. A federal prosecutor then indicted Campbell on the following day (September 27, 1933) for failing to surrender his gold. Ultimately, the prosecution of Campbell failed, but the authority of the federal government to seize gold was upheld, and Campbell's gold was confiscated.



The Continental's picture

It is true that one holds physical gold and silver as a store of wealth, not an income-generating capital investment per se. But, it is critical to appreciate that while gold and silver represent a universal and fixed tangible store of value that is time-insensitive, they are presently badly mispriced vis-a-vis the dollar. If you consider the fiscal position of USA Inc., and the accrued national debt, and the off-balance sheet deficits, and the future unfunded liabilities of the state, and the horrific demographics of the population, then you must conclude that the US dollar is obscenely leveraged and massively overvalued. If you exchange dollars for gold and silver today, you will achieve far more than wealth preservation. You will enjoy substantial capital appreciation in the coming years. In a ZIRP environment and equity markets in a long term bear, there really is no other place to turn but to silver and gold. It is that obvious.

Diplodicus Rex's picture

"gold and silver ..... they are presently badly mispriced vis-a-vis the dollar."

Does that not mean in turn that everything priced in dollars is also badly mispriced?

Diplodicus Rex's picture

"You will enjoy substantial capital appreciation in the coming years"

How so? Will the number of loaves of bread you can buy for an ounce of silver substantially increase in the future? If the answer is yes, please outline the principle or the maths behind that contention. I see it that the cost of a loaf of bread will remain broadly the same. Of course I would like my PMs to buy a lot more but I'm not banking on it (to coin a phrase).

The Continental's picture

Read what I wrote. again. Yes, silver will buy more bread.

Diplodicus Rex's picture

I'm sorry, I couldn't find a silver vs wheat chart so this gold vs wheat chart will have to do.


Apart from the noise on the right hand side from 2008 onwards the price of wheat in Gold has stayed pretty stable (within a range) from 79-07. If I understand you correctly this graph is painting a false picture because the price of gold in dollars (and hence the price of wheat in dollars) has been manipulated in the dollar's favour. Without such manipulation and if the manipulation was now suddenly stopped, the price of wheat in Gold (in the example of the linked chart) would actually be higher and remain higher. Is that correct?

Harlequin001's picture

If we're so wealthy and we all have all these houses that are worth so many millions if not hundreds of thousands of dollars/pounds/yen/blats whatever, and we have all these millions of dollars in investment monies stashed in bonds and banks that we need to do so little work for those stable wheat products like bread, then why do we need farming subsidies? Surely we can afford to pay the higher prices can't we?

No. The answer is that both wheat and gold are grossly underpriced in terms of dollars, and that can only persist until prices eventually begin to rise and banks are forced to invest their cash hoard along with everyone else.

and that is not too far off now...

That is when you will discover the real value of the dollar.

Oldballplayer's picture

But this time its different.

fj4funtx's picture

This time it is different. We are in the middle of a global monetary printfest. Never in history has that ever ended well, it typically ends with a bang, one big last devaluation to get debt to currency ratios in check via a new currency. With the US dollar being held by central banks around the world that bang is going to be dramatic. An ounce of silver could end up worth $1,000,000 and still buy the same amount of goods as today. No one has a crystal ball to know and we can all speculate, but until the printfest is over, anyone and everyone is better hedged holding some physical PMs... End of story.

Quinvarius's picture

Gold's inflation adjusted high is a Hell of a lot higher than $2,500.  It is $19,000 based on total money creation since 1981.


Tinky's picture

Then silver will trade at $1,187! Woo-hoo!

fj4funtx's picture

The gold silver ratio dropped below 20 in 1980 so it's not out of the realm of possibility.

VelvetHog's picture

400% in 3 years.  Wow you're amazzzzzing.  Where'd you buy that crystal ball?

CrockettAlmanac.com's picture

The speaker used chart analysis. I'm not a fan of that method nevertheless it is a commonly used way to attempt to discern price trends.


"This forecast is based entirely using technical & cyclical analysis and is in keeping with the mathematical form displayed so far in the bull run that has taken silver from $8/oz in 2008 to its current price of $32 an ounce – having hit $50 an ounce in 2011."

waldo simon's picture

You're quite right Dip Rex. Eventually precious metals,as a long term store of wealth will

be shown to be just that,because creating "money" from thin air,unbacked by production,

will be widely realised to have been the cause of the runaway inflation being experienced.

Only lies, trickery and more lies,is currently keeping this stranger-than-fiction FIAT game going

gmak's picture

I'm sorry. I hold physical silver and do think that price is due for a pop. BUT, I do not believe in this 'long run goelogical average'.  If you look back to 1995, gold / silver stays a lot in the 50 - 60 times range; just as much time in the 60 - 70 times range, and never below 40 except for that time when silver went up to 40.


What catallyst can possibly return the price ratio to the times of the middle ages?  .  I say buy silver when the average is > 55 and swap for gold / buy gold when the average is < 50.

Quinvarius's picture

In the middle ages, they didn't use it all up in industry.  I think silver is going to do better than 15 to 1.

Metalredneck's picture

They used it all up building church domes & monuments to dictators.

The more things change...

CrockettAlmanac.com's picture



I'm sorry. I hold physical silver and do think that price is due for a pop. BUT, I do not believe in this 'long run goelogical average'.  If you look back to 1995, gold / silver stays a lot in the 50 - 60 times range; just as much time in the 60 - 70 times range, and never below 40 except for that time when silver went up to 40.


What catallyst can possibly return the price ratio to the times of the middle ages?  .  I say buy silver when the average is > 55 and swap for gold / buy gold when the average is < 50.


Somewhere along the line you missed a thousand years of history. The gold/silver ratio approached 16:1 as recently as 1979. Saying that the historical average has been much higher since 1990 and then suggesting that the lower ratio only applies to the Middle Ages is a bit hyperbolic.

Metalredneck's picture

Silver may be the most manipulated market out there, and that is really saying something.


My question is; if gold & silver are being hyped & pushed, who is profiting?

Zero Govt's picture

as Martin Armstrong stated this week the long term trends cannot be manipulated ...er, why the fuck would you want to alter a long-term price, you cannot profit today from a trend 3 years away?!

the rigging is all about short term price movements for instant profits in the here and right now. That makes economic, bottom-line sense

Bay of Pigs's picture

As good as Armstrong is, he's very weak on the manipulation issue. 

Worse yet, the numbskulls at GoldCore are quoting Jamie Sokalsky from Barrick Gold, the poster child of the gold suppression scheme and run by a den of thieves. 

A bunch of bullshit and propaganda. ZH should dump their ass.

Diplodicus Rex's picture

This is a continuing meme which confuses me. I, like others on this board, have physical because I believe the days of fiat are numbered. Of course, I could be wrong or I could be right but over a much longer period than I had first imagined or indeed, I could be wrong all together and fiat will live forever. However, I feel that history is on my side and therefore the purchase of PMs is an apocalyptic play. The play wins out (although I can understand some of the counter arguments to that) if the apocalypse arrives. If the apocalypse does not arrive then how much worse off am I in reality? ( I live in a country where there is no tax payable on gold purchases but VAT is payable on Silver, that is, if you want a receipt..;-)

If the purpose of purchasing PMs is a play against the ever decreasing purchasing power of fiat, why is there a preoccupation in valuing it against the very thing you are trying to counter? These articles would be served better by adjusting the terms of reference. i.e. instead of "Silver will probably climb to $38.40 an ounce by September," it should read, " due to the continuing depreciation of the fiat dollar the number you can purchase with an ounce of Silver will rise to 38.4 in September. The number of loaves of bread you will be able to purchase for an ounce of silver in September will remain the same as usual." That makes much more sense.

The preoccupation with the convertability of silver into ever depreciating dollars makes no logical sense. If I want to buy a loaf of bread in September I will temporarily swap a Silver coin for some fiat (pounds in my case) and get rid of them as fast as I can by buying real goods so that I don't have to pay for their (dollar) depreciation. The fact that every month that passes I can get more dollars for my silver is immaterial because those fiat dollars will buy less.

There is an argument here that the temporary rise in Silver, priced in fiat may outpace the depreciating spending power of that said fiat. In which case, there will be a temporary "gain". However, to seal in that gain you'd need to continue to hold depreciating fiat unless you immediately spend them on real goods. If you hold the fiat as cash, the depreciation will soon catch up with the temporary gain and negate your trade. Unless you can swap the fiat gained in that narrow window for something that is real and for which you have a need then it is a bad trade.

Please someone tell me I have it wrong.

Overflow-admin's picture

Your reasoning is right, my only concern is your poor understanding of the word "fiat".


fiat [?fa??t -æt]
official sanction; authoritative permission
an arbitrary order or decree
Chiefly literary any command, decision, or act of will that brings something about
[from Latin, literally: let it be done, from fier? to become]

RockyRacoon's picture

Fiat money:  It's money because we say it is. --  B. Bernanke.

Hence:  Let it be done.

Diplodicus Rex's picture

How so? Please explain why the use of the word fiat in the context of unbacked currency is wrong. Unless you thought I was talking about Italian cars.

CrockettAlmanac.com's picture

Just throw in a word about legal tender laws and you're covered. Not that I had any problem with your analysis.



i_fly_me's picture

I have a similar reaction to these types of articles, Rex.  I am a gold proponent primarily and hold physical gold as savings; however, I recognize that silver is waaaaaaaaay undervalued complared to gold.  I know that the relationship must swing back someday, so I also hold silver against the day I can trade it for much more gold than I can currently.  I don't think of my holdings priced in terms of $ at all, just in ounces troy and how much of one I could get for the other.

XitSam's picture

You're right, the key is not to spend it on just "real goods" as you say, but productive assets. That might be a farm, bakery, wood shop, metal shop or soap factory, something that produces revenue in the economy. Owning a house, while a fine goal, does not produce revenue. If you have a productive asset you'll be able to find somewhere to live. Watch for bargains, don't worry about catching the top.

Midas's picture

Sure a house doesn't produce revenue, but if you own a modest well-built one, you can drive your living expenses very low. 

Tinky's picture

Apparently you've never owned a Bed and Breakfast.

Beam Me Up Scotty's picture

You have it right.  Thats why I don't worry about the so called volatility in the price of silver.  Even if it went down 50%, everything else would go down too.  Silver wouldn't go down 50% all by itself.  Gas would be $2 a gallon instead of $4.  So yes, you could still buy the same number of gallons of gas, and the same loaves of bread.  I'd rather save in silver than in digital fiat in a bank.

swmnguy's picture

No, I'm pretty sure you have it right.  Looking at the various historical valuation estimates and smoothing out the fluctuations, Gold and Silver have been worth about the same for millenia.  I've bought PM's not to become a fiat tycoon, but as storage of value.  As for the fiat dollars I get, those I don't swap for PM's I swap for the things I need day-to-day, or things that I need for the long term like tools, home improvements, etc.  The accumulation of fiat, especially abstract fiat, has never seemed like such a worthy objective in the long term.  Of course, there's an element of self-justification/sour grapes in that opinon; I've never had as much access to piles of abstract fiat as some.

nofluer's picture

Looking at the various historical valuation estimates


Before the 300 +/- years of inflation and currency debasement that pretty much ended the (western) Roman Empire, the ratio was about 12:1. In the US, during the final westward expansion the ratio was about 20:1, so an approximation.

As I post this, according to the Kitco charts, the ratio is at 52.74 (after maintaining about 53 or 54:1 for a brief period.)

My advice to those who might have some money (fiat) is this. Based on historical records, either gold is waaaay over priced (in USD), or silver is waaaay UNDER priced (in USD.) This indicates that a PM buyer should buy SILVER - not gold as eithr gold will come down, or silver will go up to achieve historic ratios. (If you must have gold, wait until the ratio adjusts to a more reasonable level and swap the silver out for gold.)


BigInJapan's picture

You're right.

I'm keeping mine for barter.

"Who run Bartertown?"

SilverFish's picture

For barter, Jack Daniels would give a much bigger bang for your buck. Just ask any alkie sitting on a pile of silver, but has nothing to get sauced up with.


Silver and gold are better for protecting the value of the dollard you dont plan on spending during a SHTF scenario and cashing out when the dust settles.



.......... or, cash it out at the top and buy more Jack Daniels.

CrockettAlmanac.com's picture

You're assuming that dry drunks are able to provide goods or services which BIJ wishes to acquire.

Pemaquid's picture

Invest in a fund that holds precious metals? Right! Your back yard is a smarter choice.

geoffr's picture

If society collapses to such an extent where a fund that holds precious metals or an ETF, etc. isn't good enough, then I think I'd be better off stocking up on hard liquor, cigarettes, and canned goods.

new game's picture

just love to read info at 8th grade level and get my greedy animal spirts all roiled up...

"it gonna go up dar big buddie"

fucken eh

Zero Govt's picture

"...despite continuing positive fundamentals..."

same fundamentals 10 years ago as 100 years ago as 1,000 years ago ...just the price goes up and goes down (as per last 12 months of declining fundamentals). Maybe price movement has zero to do with fundamentals GoldCore?

"The Telegraph published an unusually bullish article on silver yesterday.."

those Bullion Bank rampers get everywhere don't they GoldCore

"Mr Williams noted that the silver price was more volatile than gold.."

They don't come any sharper than this cookie

""Investing in a fund that holds a range of precious metals gives you positive diversification and less reliance on just gold."

Most funds will under-perform the Indexes by about 2% per annum while the Exchange Traded Frauds I've used underperform the spot price by 4% over 3 months. You think you've bagged a profit but no, the ETF has bagged it.