Silver Leads Gold as Dollar Teeters

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"The ratio of gold to silver has finally favored silver again after three months of consolidating."

Silver has made an initial move over the 14 level, to challenge the March highs. The gold price has rebounded, but not enough to cause as much enthusiasm. The reliable respected Adrian Douglas has spread the word that both Goldman Sachs and JPMorgan Chase have been building option call positions on both gold & silver futures contracts. Normally, options are the contrary indicator of naÔve money piling on, after a segment of the game has concluded. Not so with option futures, which is the province of insider trading.

The other inside story comes from overseas. The Germans have demanded the return of all their gold bullion held by U.S. bankers in custodial accounts. The Arabs are accumulating gold, platinum and silver. The Chinese admitted their gold accumulation. The Russians have not permitted any gold mining output to enter the markets in three years. Precious metals are being looked upon very favorably as the US$-based financial structures continue to dissolve.

The silver price is moving up the most rapidly, in lead fashion. The reasons are many, but they include the fact that the shortage in silver is far more acute. Both industrial demand results in depletion, and investment demand is growing quickly. The six billion ounce stockpile in silver once established by the U.S. government has been long gone for at least five years. The next stop for silver is 15, which should occur easily, and then 18 in another easy leg up. The cyclicals are both nicely aligned in a positive direction. Those investors who averaged their unleveraged silver positions since last autumn will be greatly rewarded. Silver has always sauntered in the shadow of gold, but it will sachet soon with a smirk and a wag.

Simply to observe the gold versus silver ratio chart. One strange price factor is the lease rate. The one-month silver lease rate is under 0.5%, but the one-month lease rate for gold is stable and negative. So the criminals running the U.S. gold treasure into the ground are paying insiders to borrow it, in order to dump it on the market. They simply do NOT have the silver to give away. The ratio of gold to silver has finally favored silver again after three months of consolidating.

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