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Friday, April 22, 2011

Trend for 22nd of April 2011

In terms of trend the markets were pretty boring today. I guess this is due to the fact that everybody is preparing for holidays and liquidity in the markets is very low. Of course, if you look at silver, it has been climbing up steadily with a reversal in the ending hours of the market. Silver is very close to its’ all time high that it reached in 1980. I do not think this will be the end of the journey for this commodity, but we could expect at least some sort of reversal before continuing its’ ascend. 

In my opinion, a very logical target for silver is 100 dollars per ounce. This means I expect the price to double from current levels. You might say that I am out of my mind, but if you looked at current instability in the world, printing of money and terrible deficits that national governments are facing I believe the target is very logical. I am not sure what the price of gold will be.

I think you have noticed very interesting phenomena. For a long time the ratio between silver and gold has been growing. A few years ago it was around 75.  However, after the crisis of 2008 the silver started advancing more than gold. It used to be otherwise. Gold would always go up more than silver. Now the trend has changed and the ratio is 31. I believe this is due to the fact that the price of gold has become very expensive and silver is still undervalued. 

Some say that the ratio could become 15 in a few years time. It is possible and quite logical. However, at the time price of silver has been going parabolic and I guess it will make a reversal at all time high of 50 bucks. However, I think it will be a short term high and will be taken again sooner rather than later. So, I am still bullish on silver. 

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