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Gold, Silver Supercyle Has Begun

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"Are commodities' price rise speculative or increased demand?"

Gold/silver supercycle

As our national debts increase, spending continues and unsettlement sweeps the East, commodities have naturally been performing well. Gold has made an all time high, a very familiar expression of recent times. The current gold price is now topping $1425 an ounce. Silver has been very bullish since its run up from $18 last August, through its $30 wall to a very respectable $36 today. While rising prices are great for precious metals investors, alarm bells are ringing as to whether the recent rise is due to speculation regarding the economy.

In 2008 during the market crash, a theory emerged. The Supercycle Theory predicted that during an economic recovery, demand for commodities would increase creating a bull run for the likes of precious metals gold and silver.

Supercycle Fueled by Urbanization
The Supercycle Theory was first ignored. Finance gurus believed that rising commodity prices would be due to speculation and in essence, manipulated to make "quick money." Well the bull run continues for commodities and precious metals continue to reach new highs. The Gold/Silver Ratio [GSR] is down from its 35-year average of 60:1. Recently, we have seen the GSR hit 40:1, it now takes a lot less silver to purchase gold. Precious metal bugs are no longer dreaming when talking of the GSR hitting its 100-year average of 16:1.

While China continues to expand at an alarming rate, India joins in the frenzy with an ever growing middle class. Commodities are being "gobbled-up" worldwide. The urbanization race is continuing to fuel the demand for commodities and therefore driving prices up to new levels. Historic trends may not be of use in today's day and age, as global superpowers shift from West to East.

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