What takes silver to $50?

“In any sector, trade the leading stock – the one showing the strongest trend” – Jesse Livermore.

Looking back at my collection of old Lind-Waldock notepads, where I ran one of the largest retail metals and energy trading desks from 2004-2011, I often documented daily the unique twists and turns of the markets while trying to come up with the next play ahead of everyone else. Silver’s 20% jump this week was the biggest weekly gain since the Lehman bankruptcy, and it appears as though the foundations for substantial upside move continues to remain. 

As gold is knocking on new all-time highs, I have remembered that historically silver has outperformed gold in bull markets. Some of my previous notes had indicated that from October 2008 to September 2011, gold futures rose 140% while the price of silver jumped 350%, pushing the Gold/Silver ratio to a bottom of 44/1. Additional notes had indicated that since 1973 when the U.S. came off the gold standard, it had averaged about 60 to 1, and the all-time low was from a period of 1976-1980 where it had bottomed out at 16/1. 

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Now I am not saying that we are going to get back to 16 to 1 (that would put silver at $125/oz.), but silver should continue to track and outperform gold in the near term. Remember, the American people’s purchasing power continues to hemorrhage after five straight weeks of a declining dollar, followed by a combination of ultra-low real yields and heightened economic and geopolitical uncertainty.  We have been extensively covering the technical backdrop of the gold and silver market in the Blue Line Futures Morning Express Research Reports so be sure to stay up to date on the developments by registering for a Free two-week trial by clicking on the link here: The Blue Line Express Two-Week Free Trial Sign up

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