Silver Will Go Much Higher
Source: MoneyWeek, Dominic Frisby (10/20/10)
". . .but take some profits for now."
I doubt that there's any other commodity with as much potential. And it's a potential that many 'talent scouts' have long since identified.
So why should you take some silver profits now? Take a look at the gold:silver ratio, which measures how many ounces of silver it takes to buy an ounce of gold. When gold and silver have had a good bull run, this ratio tends to fall quickly and dramatically. The opposite seems to occur when gold and silver are falling. This is because silver tends to rise by more and fall by more than gold. It is the more volatile of the two metals.
But when that ratio spikes down to the 45:55 area, the evidence of the last 10 years shows that you should be looking to take some silver off the table, with a view to buy back when the ratio rises. Eventually, I think this ratio will fall a lot further. In terms of supply, there is 15 times as much silver in the earth's crust, and 15, or so, to 1 is the old monetary exchange rate; I expect one day to see something like these levels again.
Please cast your eye over the chart below. The silver price is above and the ratio is below in green. I have circled the major highs for silver. You can see they occur just as the gold:silver ratio spikes down.
We are seeing just such a spike down now. We may have just a little further to go, perhaps to 55, where the ratio would hit that trendline I have drawn, but this is a spike that is starting to look concomitant with previous highs in silver.