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Contributors Silver at $168? Yes, it’s Possible

How high can silver go? Lots of people think silver could go as high as $50 an ounce. But history says it could go much higher.

The 1970s was a tough decade for the U.S. economy. In the late 1970s, few trusted the U.S. dollar. Consumers were losing their purchasing power very quickly. Many feared hyperinflation. As a result, precious metals skyrocketed.

In the second half of the decade, gold went up 235%. Silver did much better, rising 775%. It was this great outperformance by silver that created the spike you see in the chart below. The ratio of silver-to-gold (the price of silver divided by the price of gold) peaked in January of 1980 at 0.0675.

See larger image

What’s the lesson here? When people lose their faith in paper money, gold and silver do well … but silver does much better. With the Fed determined to destroy the U.S. dollar with another round of money printing, we could see another spike in the silver-to-gold ratio.

Today, the ratio is 0.0194. If we have another inflationary crisis and the ratio moves to the historic high of 0.0675, silver would reach $119. And that’s assuming the price of gold stays at $1,770. If gold moves to $2,500, silver would move to $168.

I know that silver at $168 may seem ludicrous today. But when we have a madman at the head of the Federal Reserve printing trillions of dollars, we have to take those “crazy” numbers very seriously.

Regards,


Evaldo Albuquerque
Senior Analyst

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