Silver: Is it time sit on the sidelines?

By Michael Lebowitz, Managing Director, Absolute Investment Management

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  • Gold and silver are similar in their time honored role as de facto currencies and a store of value. They have been shunned when fiat currencies were trustworthy and desirable when confidence was lacking in the currency du jour. There are some differences however. Silver is significantly cheaper and aptly called the poor man’s gold. Additionally, 50% of demand for silver is for industrial purposes, while gold has precious few uses outside of jewelry.
  • The ratio of the gold price to the silver price has decreased from 70 to 32 since last September as shown in the second graph below. Over that period gold is up about 25%. Had gold risen in line with silver it would be over $3,000 an ounce!
  • We are also aware of longstanding rumors and conspiracy theories that believe JPMorgan and HSBC are short and manipulating the price of silver lower. We have no way of knowing if this is true, but if true, it could account for the massive buying if they are covering their shorts.
  • We see no reason why the price of silver can not rise further but we think it is more likely it will drop significantly. We think its time to sit on the sidelines and let it play out.

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2 Comments
  1. John G says

    It’s called a short-squeeze. Look at the number of times the CME has raised margin limits! Look at the net flows of Silver in COMEX warehouses. Under what possible plausible scenario is this not a short-squeeze?

    EVERY time in history Bullion banks operated on a fractional reserve system, it has ended badly in a bank run. This is just the modern-day equivalent. The opportunity to make SERIOUS money is available to even the “average Joe” and put an end to at least one form of fiscal fraud in the economy.

  2. Anonymous says

    It’s called a short-squeeze. Look at the number of times the CME has raised margin limits! Look at the net flows of Silver in COMEX warehouses. Under what possible plausible scenario is this not a short-squeeze?

    EVERY time in history Bullion banks operated on a fractional reserve system, it has ended badly in a bank run. This is just the modern-day equivalent. The opportunity to make SERIOUS money is available to even the “average Joe” and put an end to at least one form of fiscal fraud in the economy.

  3. Anjon Roy says

    Bin Laden Dead!!

    Silver/Gold will see a HUGE pullback!

    Keep in mind, when gold did the “Super-top” in 1980, it was on the DAY the Soviet’s invaded Afghanistan. Gold/Silver thrive on uncertainty and turmoil. This event is a “reverse turmoil/uncertainty”

    Atleast in the short term, Silver will pull back now!

  4. Anjon Roy says

    Bin Laden Dead!!

    Silver/Gold will see a HUGE pullback!

    Keep in mind, when gold did the “Super-top” in 1980, it was on the DAY the Soviet’s invaded Afghanistan. Gold/Silver thrive on uncertainty and turmoil. This event is a “reverse turmoil/uncertainty”

    Atleast in the short term, Silver will pull back now!

Comments are closed.

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