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or the oncoming Bernanke HighVelocity HotMoney Express....
as eye sit out here in the middle of nowhere, with me mother on the verge of croakin, due to lack of attention/need of an assist to the toilet in a hospital that shall remain nameless, with me unable to do not-too-much-of-nuthin about it... sigh... (sorry for the added drama)
some interesting news to take the mind elsewhere....
http://www.kitco.com/reports/KitcoNe...oldsilver.html
Long-Term Decline In Gold/Silver Ratio To Favor Silver, Although Correction Possible
(Kitco News) - The gold/silver ratio hit its lowest levels in 13 years this week, and as the bull market continues in precious metals, analysts look for it to fall further as silver outperforms due to the combination of investment and industrial demand.
Nevertheless, some look for the ratio to correct higher in the short to intermediate term. This is largely because of technically oriented factors and since safe-haven demand from large entities might favor gold as geopolitical turmoil continues in North Africa and the Middle East.
The gold/silver ratio is determined by dividing the price of an ounce of gold by the price of an ounce of silver. As the number falls, silver is outperforming, and vice-versa.
Earlier this week, as silver hit a 31-year high, Commerzbank reported that the ratio fell to 41.5 to 1, which it said was the lowest level since February 1998. As of Thursday afternoon, the ratio was around 42.5, down from around 55 as of early November and 64 as of late August. Based on average spot monthly prices going back to 1976, the ratio has averaged around 59.
“Silver has outperformed gold for a variety of reasons,” said George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures.
Gold is bought when investors are uneasy with the geopolitical or economic climate, and other than jewelry, most metal remains in storage and is not actually consumed. Silver is also bought as an investment, but additionally has more significant industrial demand that uses up some of the supply. Thus, silver fares better amid expectations that the economy will improve, said Sterling Smith, commodity trading adviser with Country Hedging.
Gero and Smith also said as precious metals prices rise, silver investment demand rises since the metal is cheaper and thus more affordable than gold, particularly for small investors. “When gold starts to move up, silver – which has been called ‘poor man’s gold’ – seems to gather much bigger momentum,” Gero said.
The U.S. Mint reported record one-month silver-coin sales of 6.422 million ounces in January. For February to date, they are just above 2.6 million, already topping the 2.1 million for all of February 2010.
David Morgan, independent precious-metals analyst with Silver-Investor.com, said there is “a little bit of tightness in some areas” of the silver supply chain, although overall there appear to be “sufficient” supplies.
“In some small areas, like one-ounce rounds and some of the Minted silver ounces, there are delays because demand is so strong,” he said. “But that’s a manufacturing issue, not a silver-shortage issue.”
Gold Could Outperform In Shorter Term As Ratio Corrects
Morgan and Smith both look for silver to keep outperforming gold in the longer term, but nevertheless caution that gold could be poised to make some headway against the grey metal in the foreseeable future. Much of this may be due to chart-based considerations rather than any shift in fundamental factors.
“I think there will be a technical aspect where silver has accelerated too fast vis-à-vis gold, and we’re going to see gold be actually stronger,” Smith said. He sees potential for the ratio to move back toward 50 over the next two or three months.
Morgan said “it wouldn’t surprise me to see the market favor the gold for a little while,” particularly since some participants trading largely on the basis of technical-chart patterns may ready to bet on a reversal of the ratio’s trend from the last several months. He said all markets, including the ratio, have periods when they rise and fall. “We’ve seen silver lead gold here for several months. I think we could see the reverse,” he said.
Furthermore, whereas small investors often favor less-expensive silver, large entities with more capital tend to favor the gold market. Thus, the pace of gold buying could rise relative to silver on safe-haven demand as political unrest spreads in the Middle East and North Africa, Morgan said.
“That could change the ratio fairly quickly if this geopolitical situation gets even worse than it already is,” Morgan said.
Smith also noted if the global economy slows at all due to rising oil prices, this could hurt some industrial demand for silver.
Analysts Look For Ratio To Keep Declining In Longer Term
Bart Melek, vice president and head of commodity strategy at TD Securities, figures the gold/silver could dip to 40 or even lower.
“I would say silver outdoes gold a little bit,” Melek said. “Gold remains well bid and well supported…but the physical tightness of silver helps it out.”
As investor interest increases, the combination of this and industrial demand could exceed annual supply, Melek said. Furthermore, silver has been in slight backwardation lately. This is a condition in which the nearby prices for any commodity are more expensive than deferred and are seen as a sign of strong demand, with buyers willing to pay up to get the commodity right away.
Others also look for silver to outperform on a longer-term horizon.
“I do believe silver will definitely outperform gold and the ultimate ratio could go back to 16 to 1,” Morgan said.
However, this level might be two to five years away yet, he said, and likely would not occur until whenever the precious metals ultimately hit their top. Furthermore, the ratio may not remain this low for long, as was the case back in 1980 when the ratio bottomed as silver popped above $50 an ounce, he said.
“It made it to $50 for a day,” Morgan said. “So on that day, it was 16 to 1. But it wasn’t like it was there for a week. It was there momentarily.”
Smith also figures silver may fare better in the longer term, adding that the traders most likely to benefit will be those who are “nimble and buy it correctly.” The grey metal tends to have greater volatility than gold, making it trickier to pick exit and entry points.
“It will have deeper dips and hotter tops vis-à-vis gold,” Smith said. “That will allow for more profits to be made, if you’re really good at trading this stuff.”
By Allen Sykora of Kitco News; asykora@kitco.com
as eye sit out here in the middle of nowhere, with me mother on the verge of croakin, due to lack of attention/need of an assist to the toilet in a hospital that shall remain nameless, with me unable to do not-too-much-of-nuthin about it... sigh... (sorry for the added drama)
some interesting news to take the mind elsewhere....
http://www.kitco.com/reports/KitcoNe...oldsilver.html
Long-Term Decline In Gold/Silver Ratio To Favor Silver, Although Correction Possible
(Kitco News) - The gold/silver ratio hit its lowest levels in 13 years this week, and as the bull market continues in precious metals, analysts look for it to fall further as silver outperforms due to the combination of investment and industrial demand.
Nevertheless, some look for the ratio to correct higher in the short to intermediate term. This is largely because of technically oriented factors and since safe-haven demand from large entities might favor gold as geopolitical turmoil continues in North Africa and the Middle East.
The gold/silver ratio is determined by dividing the price of an ounce of gold by the price of an ounce of silver. As the number falls, silver is outperforming, and vice-versa.
Earlier this week, as silver hit a 31-year high, Commerzbank reported that the ratio fell to 41.5 to 1, which it said was the lowest level since February 1998. As of Thursday afternoon, the ratio was around 42.5, down from around 55 as of early November and 64 as of late August. Based on average spot monthly prices going back to 1976, the ratio has averaged around 59.
“Silver has outperformed gold for a variety of reasons,” said George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures.
Gold is bought when investors are uneasy with the geopolitical or economic climate, and other than jewelry, most metal remains in storage and is not actually consumed. Silver is also bought as an investment, but additionally has more significant industrial demand that uses up some of the supply. Thus, silver fares better amid expectations that the economy will improve, said Sterling Smith, commodity trading adviser with Country Hedging.
Gero and Smith also said as precious metals prices rise, silver investment demand rises since the metal is cheaper and thus more affordable than gold, particularly for small investors. “When gold starts to move up, silver – which has been called ‘poor man’s gold’ – seems to gather much bigger momentum,” Gero said.
The U.S. Mint reported record one-month silver-coin sales of 6.422 million ounces in January. For February to date, they are just above 2.6 million, already topping the 2.1 million for all of February 2010.
David Morgan, independent precious-metals analyst with Silver-Investor.com, said there is “a little bit of tightness in some areas” of the silver supply chain, although overall there appear to be “sufficient” supplies.
“In some small areas, like one-ounce rounds and some of the Minted silver ounces, there are delays because demand is so strong,” he said. “But that’s a manufacturing issue, not a silver-shortage issue.”
Gold Could Outperform In Shorter Term As Ratio Corrects
Morgan and Smith both look for silver to keep outperforming gold in the longer term, but nevertheless caution that gold could be poised to make some headway against the grey metal in the foreseeable future. Much of this may be due to chart-based considerations rather than any shift in fundamental factors.
“I think there will be a technical aspect where silver has accelerated too fast vis-à-vis gold, and we’re going to see gold be actually stronger,” Smith said. He sees potential for the ratio to move back toward 50 over the next two or three months.
Morgan said “it wouldn’t surprise me to see the market favor the gold for a little while,” particularly since some participants trading largely on the basis of technical-chart patterns may ready to bet on a reversal of the ratio’s trend from the last several months. He said all markets, including the ratio, have periods when they rise and fall. “We’ve seen silver lead gold here for several months. I think we could see the reverse,” he said.
Furthermore, whereas small investors often favor less-expensive silver, large entities with more capital tend to favor the gold market. Thus, the pace of gold buying could rise relative to silver on safe-haven demand as political unrest spreads in the Middle East and North Africa, Morgan said.
“That could change the ratio fairly quickly if this geopolitical situation gets even worse than it already is,” Morgan said.
Smith also noted if the global economy slows at all due to rising oil prices, this could hurt some industrial demand for silver.
Analysts Look For Ratio To Keep Declining In Longer Term
Bart Melek, vice president and head of commodity strategy at TD Securities, figures the gold/silver could dip to 40 or even lower.
“I would say silver outdoes gold a little bit,” Melek said. “Gold remains well bid and well supported…but the physical tightness of silver helps it out.”
As investor interest increases, the combination of this and industrial demand could exceed annual supply, Melek said. Furthermore, silver has been in slight backwardation lately. This is a condition in which the nearby prices for any commodity are more expensive than deferred and are seen as a sign of strong demand, with buyers willing to pay up to get the commodity right away.
Others also look for silver to outperform on a longer-term horizon.
“I do believe silver will definitely outperform gold and the ultimate ratio could go back to 16 to 1,” Morgan said.
However, this level might be two to five years away yet, he said, and likely would not occur until whenever the precious metals ultimately hit their top. Furthermore, the ratio may not remain this low for long, as was the case back in 1980 when the ratio bottomed as silver popped above $50 an ounce, he said.
“It made it to $50 for a day,” Morgan said. “So on that day, it was 16 to 1. But it wasn’t like it was there for a week. It was there momentarily.”
Smith also figures silver may fare better in the longer term, adding that the traders most likely to benefit will be those who are “nimble and buy it correctly.” The grey metal tends to have greater volatility than gold, making it trickier to pick exit and entry points.
“It will have deeper dips and hotter tops vis-à-vis gold,” Smith said. “That will allow for more profits to be made, if you’re really good at trading this stuff.”
By Allen Sykora of Kitco News; asykora@kitco.com