Tuesday, February 8, 2011

Silver Perspective

The chart below provides some perspective on where silver stands today in relation to its record high of $50 set back in 1980.  The above ground silver inventory today is currently 90% below where it stood in 1980, yet the price is currently 50% less than the 1980 high. 



The supply of silver is one component of price.  A second is the money supply, which has grown from $1.5 trillion in 1980 to just under $9 trillion today.  The chart below, produced by the Federal Reserve, shows the money supply growth (m2) from 1980 to present.



Once again to summarize:

*The above ground silver is currently 90% below the level available in 1980

*The money supply has grown 600% between 1980 and today

*The silver price is currently about 50% below its 1980 peak price

*There is currently about 50% less silver available than gold above ground to purchase

*Gold is currently 46 times more expensive than silver. (46 to1)  The historical ratio is 15 to 1.

When this bull market meets the mania stage it will stagger the imagination at the price levels reached.

As a word of caution, based on technical analysis, the market is due for a correction and possibly a large one.  Look for this as a tremendous purchasing opportunity.

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