Silver's Time?

Most silver analysts will tell us that silver endured a 23-year bear market from 1980 to 2003. 

The decade of the 1990s was an especially harsh one for silver in many respects.  When silver fell from grace in January, 1980, if fell hard, it fell far and it fell for a very long time. 

Government dishoarding of “surplus” silver kept pressure on the metal’s price long after the actual sales occurred.  Worldwide there was the perverse situation of a perceived glut of metal coupled with a kind of popular disdain for it that could have only come from a busted mania. 

Despite years and years of net silver consumption by industry, silver became demoralized, unwanted and very bloody cheap.  By the middle 1990s the price of silver had based in the $3.50 range an ounce, and found persistent resistance over $5 the ounce.  Silver was cheap relative to gold, it was cheap relative other commodities and for more than twenty years it punished all who embraced it. (We think that has changed now, but most people and especially most Americans won't know it for a while yet.) 

 (Silver, monthly since 1990.  If the image is too small click on it for a larger version.) (Continued)

 
During that nasty period for the second most popular precious metal, silver seemed anything but precious.  During the early 1990s we witnessed an unusually high gold/silver ratio of roughly 85 ounces of silver to buy an ounce of gold metal. (We think that is changing as people re-learn that silver is money.)

(Gold/Silver Ratio since 1990.  If the image is too small click on it for a larger version.) 

 
Is there any wonder then why investors have been slow to embrace silver today?  They were conditioned by the price and by silver’s relative value for 23 years to think that silver was plentiful and going nowhere.  

But silver is not really all that plentiful as we and other savvy metals analysts have made the case since the 1990s. We think that is precisely why silver should be accumulated today. Because it was undervalued for so long, and because global supplies have been so diminished ... and because sooner or later people will re-learn what they knew in the beginning of the last century - that silver is money.  There just isn't as much of it as there is gold above ground these days. 

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Today, Tuesday, is COT cutoff day here in the U.S.  Despite weakening Big Markets, we noticed determined bidding action in early trade for the metals.  Both gold and silver are showing early modest strength as we send this off to be posted.

We are comfortable with our current stops for our new short-term ammo metals trades of $1,205 equivalent for gold and $18.71 for silver.  Stay sharp, Vultures. 

That is all for now, but there is more to come.