Max Keiser and Stacy Herbert
Max Keiser and Stacy Herbert
– Bloomberg silver price survey – Large majority bullish on silver
– Silver median “12 month-forecast” of $20
– Precious metal analysts see silver “24 percent rally from current levels”
– Investors are pouring money into silver ETFs
– Speculative funds bearish even as ETF assets rise to record
– Spec funds being bearish is bullish as frequently signals bottom
– Important to focus not just on silver price but on silver value
– “Important to note that all portfolios under all conditions actually perform better with exposure to gold and silver” – David Morgan (see video)
In a Bloomberg survey of 13 traders and analysts, the majority were bullish. 11 people said silver prices would rise and two predicted declines.
Among the seven respondents that provided estimates, the median 12-month forecast was $20 — indicating a 24 percent rally from current levels.
Assets in exchange-trade funds backed by silver have risen 6.6 percent since April 24 to 21,211 tons, according to data compiled by Bloomberg.
In the same time, hedge funds turned negative as prices tumbled. In the week ended July 11, hedge funds were net short by 5,402 contracts, according to U.S. Commodity Futures Trading Commission data. Short positions have tripled since the week of April 25 to 60,775 contracts.
We continue to see silver as undervalued vis a vis gold but more especially vis a vis stocks, bonds and many property markets. Rather than selling the financial insurance that is gold, we would advise reducing allocations to stocks, bonds and property and allocating to silver.
If one is very overweight gold in a portfolio and has no allocation to silver than there is of course a case for selling some gold and reweighting a portfolio in order to diversify into silver.
With the gold to silver ratio at 76 ($1235/$16.20/oz), the silver price is attractive at these levels and has the potential to be the surprise out performer in H2, 2017.
Silver’s industrial uses and coin and bar demand should see the gold/silver ratio gradually revert to the mean average in the last 100 hundred years which is close to 35:1. This was seen again in April, 2011 when the gold silver ratio fell to 32.4 with silver at $48/oz and gold at over $1,500/oz.
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