Silver Jumps To Two Month Highs As Oil Reverts

Tyler Durden's picture


Silver has popped almost 2% today - its biggest jump in 3 weeks - as it nears its 100DMA. So what? It's still down notably from its Q1 swing highs but two things stand out to us as intriguing. First, oil priced in ounces of silver has seen a very narrow range of values since Bernanke's Jackson Hole speech in 2010 (QE2) when money-printing went full retard; and very recently the price of oil in silver had reached the upper end of that channel - and is now reverting. Second, the recent outperformance of silver over Gold has reverted the gold/silver ratio to its post-Bretton-Woods (1971) average at around 56x (up from a recent low of around 32x in April 2011). It seems there are stirrings in the real asset markets as energy and hard-money revert.

Silver outperforming Gold today...

As Oil priced in Silver begins to revert back to its post-Jackson Hole average - after touching the top of its range once again...


and Silver and Gold have reconnected in 'value' terms relative to post-Gold-Standard levels...


Charts: Bloomberg

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Mon, 08/20/2012 - 12:42 | 2720800 LoneStarHog
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Shhhhh! ... Don't tell Karl Denninger.

Mon, 08/20/2012 - 13:01 | 2720847 malikai
Mon, 08/20/2012 - 13:04 | 2720876 SilverTree
SilverTree's picture

What is the Truth to BS ratio?

Mon, 08/20/2012 - 13:17 | 2720923 pies_lancuchowy
pies_lancuchowy's picture

Whatever units you would use, it's near all-time lows !

Mon, 08/20/2012 - 15:07 | 2721309 AllThatGlitters
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I think silver outperformance for a single day like today can only be attributed to the breakout.  Momentum on technicals, or perhaps short-covering.  Doubt "value" has anything to do with it at this point.


Gold is next.  It hasn't broken out of its wedge, but is poised to do so:


Once it does, Gold outperforms silver on that day or the next.  Could play catch up even today.

Mon, 08/20/2012 - 13:38 | 2721005 ParkAveFlasher
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T/BS about the same as AU/seawater.

Mon, 08/20/2012 - 14:43 | 2721238 LowProfile
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Here's how it looked to us so far.

Damn that's hard to read malikai

Mon, 08/20/2012 - 19:14 | 2722042 malikai
malikai's picture

We're going to be fixing that next.

Mon, 08/20/2012 - 14:46 | 2721249 AllThatGlitters
AllThatGlitters's picture

Can you change the background on those charts to white?  As is, can barely see them as there is no contrast.  

Here is how silver looks to ME right now:

Up big, and breaking out of a descending wedge in a big way.

Mon, 08/20/2012 - 19:36 | 2722088 malikai
malikai's picture

Soon. Probably not white, but certainly more visible and distinguishable.

It was up very big. And a lot of other things, particularly gold, should have gone with it.

Silver's move is suspect. Gold's timidity is also suspect. Might be a nice compression play in there.

Mon, 08/20/2012 - 13:17 | 2720924 LoneStarHog
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Hard Asset as defined by Karl Denninger:  A mattress overly stuffed with Federal Reserve Notes.

Mon, 08/20/2012 - 15:32 | 2721382 HardAssets
HardAssets's picture

Hey, - - kiss off Denninger !

Mon, 08/20/2012 - 13:22 | 2720937 laozi
laozi's picture

How low can the silver/gold ratio go? 10? 2? Mike Maloney claims there are less investment-grade silver than investment gold nowadays..

Mon, 08/20/2012 - 13:58 | 2721082 Deo vindice
Deo vindice's picture

Silver 'pops' or 'drops' over the space of an hour are not news. Trends over a period of time are news. 2% rise in price can just as easily be followed by a 5% decline later in the day.

Mon, 08/20/2012 - 15:30 | 2721384 HungrySeagull
HungrySeagull's picture

I say 12-1 bottom. Nothing lower.


Unless someday the world cannot find silver at any price for industry.


The price rise is not news to me. Remember, buy and take delivery yourself. Anything else and paper is no-go.


There will be a day a-coming....

Mon, 08/20/2012 - 20:08 | 2722164 TheSilverJournal
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The power of the rush into PMs will be phenomenal. All major fiat currencies will collapse together with the world's bank system is basically one big system.

16 to 1 is the historical average but silver has been very undermined due to it's demonetization almost 50 years ago. And it became an industrial metal due to the technologification of the world. There's now less weight in investment grade silver available than investment grade gold, which is ridiculous. And there's only 2 to 4 times more above ground silver than gold. THE WEIGHT RATIO OF SILVER/GOLD IS VERY LOW.

With the largest transfer of wealth in history combined with the lowest available ratio of silver to gold in history leads me to believe that the price ratio of silver/gold will smash through 10/1. The silver/gold ratio has hit 10/1 multiple times in modern history and this time will be unprecedented. I have a hard time believing it can get lower than 3/1. My best guess is the low in the silver/gold ratio after currency collapse will be in the 7/1 to 5/1 range.

Mon, 08/20/2012 - 18:49 | 2721979 Tanz der Lemminge
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That's all right - he's too busy killing his own forum.

Sheesh - what a maroon - he had one of the best sites going a few years ago - then he figures out all kinds of new ploys to run people off.

Mon, 08/20/2012 - 12:45 | 2720804 Cognitive Dissonance
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4 out of 5 technical analysts prefer Bullish declining wedge breakouts over the competing Ponzi.

My dentist does as well.

Mon, 08/20/2012 - 13:12 | 2720904 diogeneslaertius
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oh you :)

Mon, 08/20/2012 - 15:36 | 2721398 HardAssets
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and I bet your dentist will (at least, someday) . . . take PMs to do a root canal

Mon, 08/20/2012 - 12:45 | 2720813 OneTinSoldier66
OneTinSoldier66's picture

Nice. I'm glad that I bought a little more Silver this last Friday.

Mon, 08/20/2012 - 13:38 | 2721003 ThirdWorldDude
ThirdWorldDude's picture

Load that sub-$30 boat and hold your hats, we're about to take off.

Mon, 08/20/2012 - 12:46 | 2720814 tocointhephrase
tocointhephrase's picture

Keep stacking oh and WINNING!

Mon, 08/20/2012 - 12:48 | 2720822 Odin
Odin's picture

Crash JP Morgan Buy Physical Silver!.....mmmgahh...Sorry flashback...

Mon, 08/20/2012 - 12:49 | 2720825 JackT
JackT's picture

Time to raise those margins again?

Mon, 08/20/2012 - 12:50 | 2720830 yogibear
yogibear's picture

Benny Bernanke money printing finger is getting itchy again. The central banks only answer is to print.

Mon, 08/20/2012 - 12:50 | 2720832 OneTinSoldier66
OneTinSoldier66's picture

<-- I would like the paper ponzi system to crash ASAP

<-- Please keep kicking the can down the road as long as possible

Mon, 08/20/2012 - 13:19 | 2720931 francis_sawyer
francis_sawyer's picture

I hate to say it... But every day I get to restock inventory which was lost on the last canoe trip is a good day 4 me... On that note ~ the catfish at the bottom of the stream from my last expedition are celebrating on today's charts...

Mon, 08/20/2012 - 14:25 | 2721176 malikai
malikai's picture

If only you knew.. Those catfish are on my plate right now. And thanks for the new silverware!

Mon, 08/20/2012 - 14:28 | 2721184 gmrpeabody
gmrpeabody's picture

Next fishing trip, keep that ballast in the center of the canoe..., works better. Unless someone forgets and stands up..., again.

Mon, 08/20/2012 - 12:52 | 2720836 fuu
fuu's picture

SiLvEr BiTcHeZ!

Mon, 08/20/2012 - 15:41 | 2721423 akak
akak's picture

Trav7777, eat your heart out!

(You all just KNOW that he still haunts this forum!)

Mon, 08/20/2012 - 15:51 | 2721467 fuu
fuu's picture

Trav doesn't have a heart though...

Mon, 08/20/2012 - 12:55 | 2720844 Conax
Conax's picture

Whatever the reason, it is nice to see it making some sort of move.

Go, my poca plata, fly!  It's money and should be valued a lot higher, with all this easing and printing around the world.

Mon, 08/20/2012 - 12:56 | 2720848 Canadian Dirtlump
Canadian Dirtlump's picture

I was going to lament not buying any last friday, but in reality to me getting a maple for under 35 bucks is a good buy so I'll leave it at this -


fuck blythe in the ass balls deep no lube first stroke - same goes for her masters pardon the pun.

Mon, 08/20/2012 - 13:05 | 2720882 UGrev
UGrev's picture

Definitely a forehead slap and a chin omellete. 

Mon, 08/20/2012 - 15:31 | 2721388 HungrySeagull
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I have plans to purchase myself.

Remember, taking delivery at any price 50 and below is the good thing to do.

Mon, 08/20/2012 - 15:48 | 2721457 Uncle Remus
Uncle Remus's picture

"fuck blythe in the ass balls deep no lube first stroke - same goes for her masters pardon the pun."

Very agile CD, very agile. I am sure that dampened some panties out there.

Mon, 08/20/2012 - 13:01 | 2720868 l1b3rty
l1b3rty's picture

Qe3 Jackson Hole??

Mon, 08/20/2012 - 13:05 | 2720883 Canadian Dirtlump
Canadian Dirtlump's picture

Not that technically Silver even needs QE to explode that may well be part of it - but it is curious silver popped a much more significant boner than gold if it is based on a jackson glory hole rumor..

Mon, 08/20/2012 - 13:06 | 2720884 JLee2027
JLee2027's picture

Paper silver is not going anywhere, COMEX is controlled by the thugs.  If it does go up, it's just a bear trap for the unwary.

Mon, 08/20/2012 - 13:08 | 2720890 Venerability
Venerability's picture

There's a rumor on the CDE board at Yahoo that China intends to utilize Silver as part of its official reserves.

Silver bullion was a part of most countries' official reserves not all that long ago, and it was especially popular in Asia, as everyone knows.

As I said the other day, China is "not amused" at the incessant China bashing coming from the US and UK. Nor does it appreciate the meddling - their word - by the West in their efforts to control oil and gas production in the South China Sea.

Anything to do with Silver - as opposed to Gold - is a revenge strike at the evil heart of the Alpha Bank, particularly its London operations. Which may well appeal to China, don't you think?

Mon, 08/20/2012 - 14:46 | 2721247 LowProfile
LowProfile's picture

China will need some help, not sure they are big enough to go it alone.

That said, I wish them well.

Tue, 08/21/2012 - 00:46 | 2722821 plata pura
plata pura's picture

them persian blokes are bound and determined to do the same; rumor has it the 13th dwarf that slipped snow white the schnitzel be coming out of the well flinging kesef. carlo slim the mestizo grande gato fully intends also to make ley king once again. the back side of peak silver will game test all..............

Mon, 08/20/2012 - 13:12 | 2720903 Peter Pan
Peter Pan's picture

The price of silver and gold will next move when people realise that the money owing to them is attached to either severly impaired assets or impossible to fufill prromises.

Mon, 08/20/2012 - 13:15 | 2720914 diogeneslaertius
diogeneslaertius's picture

fuck comedy clubs, i just read ZH


also zero anything growth since the 70's

Mon, 08/20/2012 - 13:15 | 2720916 diogeneslaertius
diogeneslaertius's picture

you wont find a more witty and intelligent series of informative articles and commentary anywhere else

Mon, 08/20/2012 - 13:16 | 2720919 pies_lancuchowy
pies_lancuchowy's picture

the recent outperformance of silver over Gold has reverted the gold/silver ratio to its post-Bretton-Woods (1971) average at around 56x (up from a recent low of around 32x in April 2011)                       Outperformance of gold over silver, you mean .            

Mon, 08/20/2012 - 13:20 | 2720934 diogeneslaertius
diogeneslaertius's picture

1977 was a good year for raping the plebs


LBJ/Nixon and every single one since, go ask JFK's ghost for enough silver to pay the ferryman

Mon, 08/20/2012 - 13:28 | 2720960 Arnold Ziffel
Arnold Ziffel's picture

$200 an ounce is what John Williams predicts silver may rise to in the near future in reaction to debasement of fiat (and electronic) money.


All I know is my SLV and GLD are up over 250% while my house keeps dropping in value with no end in sight.

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