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Gold:Silver Ratio Hits 83! Mean Reversion?

It's the perennial question gold or silver? Well if you didn't notice, the GSR (gold:silver price ratio) just hit 83, only a smidge off a 20 year high. Why is that significant? Well few things in life are certain, but one that essentially is, is the mathematics rule of 'mean reversion'.

A mean (average) is established by a variable number or index over time rising and falling, forming an average or mean around the middle of that range. We have reported numerous times before about the GSR being one such example. Whilst silver and gold generally track each other, the extent of that varies over time as silver is the more volatile of the two it historically has lower lows and higher highs compared to gold. With a 100 year average sitting around the 45 figure and 83 being at a near historic high (check out the charts below), it is telling us silver is seeing its lower low about now-ish. Those who like to buy low and sell high may be taking particular interest about now.

To quantify this on today's prices with gold at $1716 and silver at $20.65, if the gold price did not change one single cent but the GSR reverted to the mean of 45 you would see an 85% increase in your silver price. Sound good? Well that (by definition) is only half the story. That was just to the mean of 45. To establish that mean, history tells us it fluctuates equally either side of the mean. That would mean a GSR of roughly 10, or silver at $172/oz after a 731% increase, again without gold moving a single cent.

This is a macro trend and can't be applied to the immediate future. Silver is arguably dragged down now because it is half commodity and all commodities are in the gutter. But with patience and logical thought application it looks very compelling as a buy right now.

Let us leave you with this too the GSR is 83 yet silver is mined about only 9 times more than gold, they estimate the in ground ratio is only about 16 times and that there is only about 4.5 times in above ground inventory. Half of it is used in industry in products that are largely discarded after use (i.e. no recovery). Does any of that justify 83???

 

Even The 'Experts' Are Worried

The world's top 20 financial ministers met over the weekend and many economists waited with baited breath to see if a coordinated global stimulus push would result. The IMF was certainly pushing for it, saying "They should go bold, they should go broad and they should go together". But it seems sanity, for now, prevailed with some dire warnings amongst discussions.

From German Finance Minister, Wolfgang Schuble:

"Fiscal as well as monetary policies have reached their limits. If you want the real economy to grow there are no shortcuts which avoid reforms." He added that whilst it prevented the GFC from spiralling out of control "they may have laid the foundation for the next crisis."

What does that mean? Well William White, chairman of the Economic and Development Review Committee at the OECD and former chief economist at the Bank for International Settlements (BIS), had this to say:

"If you think about a crisis period as a period of deleveraging, in fact this has not happened and we've gone in the very opposite direction. Now, on the household side, clearly there have been some improvements made but on the corporate side in the US, things have gotten significantly worsethe debt ratios for corporations have gone up very substantially as has government debt

More importantlyagain, when I say the situation is worse today than it was in 2007in 2007 this debt problem was essentially confined to the advanced market economies. Since then, the debt ratiosthe private debt ratios in particularhave exploded in the emerging market countries and so we now have in a sense a global problem whereas in 2007 you might say we had a regional problem with the advanced market economies. But now it's basically everywhere so, yes, I do think that the situation is worse than it was then"

(If you recall we wrote last week that Australian household debt is the worst in the world!)

So by not agreeing to further stimulus they are seemingly accepting they have gone as far as they can, added even (and substantially) more debt to e debt problem, and may have to let the market be the market (for now). That could prove to be very messy as many believe the financial market falls (and gold's gains) this year are a sign of the market having lost faith they have it under control.

This all prompted Europe's biggest bank, Deutsche Bank to write to investors:

"There are rising stresses in the global financial system; in particular the rising risk of a U.S. corporate default cycle and the risk of a sharp one-off renminbi devaluation due to the sharp increase in China's capital outflows,"."Buying some gold as 'insurance' is warranted."

 

Gold's Golden Cross

As evidenced by the gold price action this year (up nearly 19%), we have seen a flight of funds into the safe haven amid growing fears and plunges in financial markets.

The first graph below shows inflows into gold funds on a 3 week rolling basis. What you are looking at is the biggest inflows since June 2009 (amid the GFC). That flight of funds saw $2.7b leave shares and $2.6b enter gold in just one week, $5.8b over the 3 weeks.



Such demand broke through the other downward pressures on gold (COMEX shorting by commercial banks) and saw the occurrence of the financial milestone, the "Golden Cross" whereby the 50DMA (daily moving average) crosses the 200DMA as can be seen in the chart below.



The last time we saw the coinciding of such gold fund inflows and a golden cross was in February 2009 with gold in the mid $800's. That saw the start of a 120% bull rally.

 

The JPMorgan Gift?

Regular readers will know that every now and then we pass on silver analyst Ted Butler's thoughts. Ted is dedicated to analysing the COMEX futures market via the weekly CFTC Commitment of Traders (COT) report and the monthly Bank Participation Report. He has established that banking giant J P Morgan are both the biggest holder of short futures contracts (selling, or betting on a price decline) whilst simultaneously having the largest (long) physical silver hoard, which he estimates at around 400m oz. The graph below shows that in COMEX plus he maintains JPM have been a large reason for the record high US Silver Eagle sales.

The premise is both simple and disgusting at the same time. Short this relatively small market with your enormous might and client money, suppressing prices, and simultaneously buy up real physical metal at a bargain. The theory is make money on the way down on paper/futures trades and when the whole paper/financial system collapses, you are sitting on a pile of insurance in the form of physical silver to save yourself from going down with the rest of the banks. The beauty is that 'mum and dad' investors and self managed super funds can play the same game enjoying buying at the same current low prices established by these commercial banks. It in part even explains the sky high GSR.

Here's a little of what he had to say last week:

"In silver, it's different the 8 largest COMEX traders hold 400 million oz net short versus maybe a billion oz or so of actual inventories and in the face of an unprecedented inventory turnover pointing to no spare metal being available. This is why the price of silver has been made to look so rotten so as to discourage anyone from even thinking about buying it. While I must admit it has worked like a charm for the crooks at JPMorgan over the past five years, it's a scam running out of time." 23/2/16

The elephant in the room, with such elevated short positions amongst these commercial banks, is that should there be a market shock (sharemarket crash, big default, war, etc) which sees the real price of silver spike, you could well see the mother of all short covering rallies as they rush to close their short positions.

 

Gold Enters Bull Market

Something happened last night that you may not have 'felt' as an Aussie, nor will you likely see on the news. Whilst we reported previously of US shares entering a 'bear market', defined as a 20% fall of the recent high, last night gold entered a 'bull market' in USD spot terms having risen over 20% off the recent low. This is the first time we've seen this since it's high in 2011 and fresh off the Golden Cross. The chart below shows this:



In Aussie dollar terms we kissed 20% in mid February already, with the recent strengthening (and in most people's opinion short life span) of the AUD bringing us a small fraction below 20% as we write.

If you haven't already you can visit our Gold and Silver Price Charts on our website at any time to see the Aussie price performance over any period you like together with the AUD.

 

The 2016 gold rally was great but I think a retracement is more probable than blue-sky.

If the US Federal Reserve cut interest rates or indeed follow Japans lead of negative interest rates, the US stockmarket could rally and of course that's not good news for gold.

I also think, some folk are not taking into account seasonal trends.

 

JP Morgan - Sell Shares Buy Gold

Last week we reported Ted Butler's findings on JP Morgan's silver positions in both COMEX and in physical. Friday's Commitment of Traders and Bank Participation reports show that whilst the 5 biggest US banks reduced their silver short position, they increased there gold shorts, now at a near 3 year high 72,867 COMEX gold contracts (72.9m oz!)

So it is quite 'interesting' that just late last week JP Morgan advised clients that:

"Equities, credit and commodities have all rallied in the last three weeks, as some of the immediate threats to the world economy have faded from attention, possibly only because the bad earnings season has wound up. But, to us, the fundamentals of growth, earnings and recession risk have not improved, and if anything have worsened. We remain wary of the near-empty ammo box of policy makers.

Our 12-month-out US recession odds have risen to 1/3.The eventual recession should bring US stocks down some 30%, creating a strong downward risk skew to returns over the next few years."

They then go on to say, for the first time this cycle, they are now 'underweight' (sellers of) equities and, wait for it. 'overweight' (buyers of) gold.

Suppress the price, load up, and then what?

 

Has Canada Marked the "Trudeau" Bottom in Gold?

News broke last Thursday night that Canada had sold the last of its gold reserves as it deals with its post mining boom tumbling economy.

Whilst we reported recently that Venezuela had done something similar, it is neither a G20 country nor did they sell it all (less than a third). What Canada has done is more extraordinary for couple of reasons.

Firstly, as can be seen from the graph below, central banks have been strong buyers of gold since the GFC. Prior to the GFC and post the gold standard dismantling in the early 70's, central banks were sellers of gold reserves. 'Who needs it?' they may have been thinking. The GFC reminded them of gold's value in a diversified portfolio (590 tonne just last year as things appear to be unravelling again). This latter point is what makes Canada's move seem so desperate and ill-considered. They now have close to 60% of their reserves in the USD. Hardly balanced, and against responsible central bank 'policy' (eggs and baskets).



Whilst gold is up 20% this year, it has really only just recently bottomed in this last cycle. That of course is prompting comparisons of what Canadian Prime Minister Trudeau just did with what British Prime Minister Brown did in 1999 when he sold around half of their gold reserves at the very bottom of that cycle (see the chart below). That lowest price in 20 years is affectionately called the Brown Bottom. Who knows, maybe we just witnessed the Trudeau Bottom?

Another lesson in this news is the beauty of gold's liquidity. As with Canada at a macro level, at a micro level we as individuals don't always get to choose when we need funds. The beauty of having gold and silver is that it provides choice on a number of levels. Firstly, when you need to liquidate an investment for cash it is nice to have a diverse portfolio so you can choose to liquidate that asset that is currently performing best. Secondly, as opposed to property, you can liquidate just part of your gold or silver holding, selling just a few bars/coins as needed, and can do so immediately rather than waiting for your property to hopefully sell.

 

Trudeau is a post modern poseur who is reality averse. Many Canadians are glum about his Prime Ministership.

 

Record Indian Gold and Silver Imports 2015

The Indian government has just introduced another hurdle to try and stop its people from buying gold. We've written extensively on the topic since the government swooped in 2013 with heavy taxes and charges to try and stop the rampant gold buying that saw enormous pressure on their trade account and rupee as gold represented the 2nd biggest import after oil.

The latest cunning plan introduced late last year was a gold monetisation scheme to get people to hand in their gold and receive a yield. That has been an abject failure as handing your gold to a bank defeats the purpose of having a hard asset with no counter party risk. The latest control is stricter licensing/reporting and excise duty on jewellers.

So for a populace that rivals China for a cultural understanding of the true value of holding precious metals to protect one's wealth how are these controls going?

Well figures recently released for 2015 show a couple of things. Firstly (as seen in the chart below) 2015 just saw the 3rd highest amount of gold imported in history at 947 tonne.



Secondly we saw that, whilst Indians do indeed love their gold, when the government makes it that hard many appear to be turning to silver. Per the chart below, 2015 saw the highest ever import numbers for silver at a whopping 8,504 tonne. So at a time when the world was ooo'ing and ahhh'ing at the US Mint selling a record 47m Silver Eagles last year, India imported nearly 6 times that amount.



Now in case you missed it check out what each of those amounts represent as a percentage of world mine production. India alone imported over 30% of world production of both gold and silver.

 

China Doubling Down Stimulus to Infinite?

Firstly for context, we recently reported on Japan unleashing negative interest rates in a seemingly last ditch attempt to stimulate growth in a nation drowning in debt and deflation. Well this week saw their 10 year bond yield fall to MINUS 0.1% and 30 year bond yield plummet to just 0.47%. This has never happened before in all of history. People are actually paying (as opposed to getting paid) to hold 'safe haven' 10 year bonds and getting just 0.47% for 30 year bonds. (So much for the 'it doesn't yield' argument against the other safe haven, gold.) Such is the nature of a broken economy, the world's 3rd largest.

So how about the 2nd largest economy in the world, China? Whilst Japan holds the trophy for highest debt to GDP in the developed world, China has gone the hardest of late in outright terms accounting for 40% of all global debt creation over the last 7 years. But like Japan they appear to be hitting something of a debt wall with the well publicised decline in growth and their financial markets.

So one could be excused for being just a little surprised and even wary when this week they announced they would ramp up stimulus to achieve target growth of 6.5 - 7% over the coming years.

What makes the announcement more amazing is the market's reaction. On the expectation such growth will need more steel, ore jumped an all-time record 19% in one session. Indeed there has been a general feeling of buoyancy across all commodities since. Of course the Aussie dollar has been pumped in the process, hitting 75c last night which pushed down A$ gold and silver accordingly. So can this last?

China's debt is already growing at twice the rate of its GDP or economic growth. (really, we could stop writing there, enough said but) Their debt to GDP currently sits at around 350%. As Japan is showing us so starkly clearly right now, there gets a point where the debt burden outweighs the stimulus. Saying a target doesn't make a target. Be very careful 'buying' this announcement and if you do, have your 'insurance' in place because it is just inflating the bubble even tighter the pop will be even worse. That temporarily higher AUD just made that insurance a little cheaper to buy too

 

Central banks "No Ammunition Left"

Shares and the USD fell last night and gold & silver surged on the latest European Central Bank meeting news. In the past such increased stimulus announcements would have seen shares surge, but 2016 is clearly marking a market losing faith in the ability of central bankers. Listen to today's podcast https://www.ainsliebullion.com.au/g...ie-radio-podcast/tabid/88/a/1188/default.aspx to hear all about the ECB announcement, but there was one morsel of Draghi's commentary that caught our ear

"The measured driver of the economy and the recovery basically remains our monetary policy,"

Yup not fundamental 'natural market' growth, not government fiscal policy reform (spending less than your income) but debt fuelled stimulus is the driver of the Euro zone economy and any hope of recovery.

Coincidentally this week we heard from ex US Fed President Dick Fisher tell a live CNBC audience that:

"we injected cocaine and heroin into the system" ."now we are maintaining it with ritalin."

He then spells out that all it did was raise financial asset prices but didn't actually work for the broader economy. It didn't actually fix anything. It was only 2 months ago in another interview he said "The Fed front-loaded an enormous market rally in order to create a wealth effect."

2016 appears to be the beginning of a realisation that the main thing propping up financial markets is central bank stimulus and that very same stimulus is responsible for over $60 trillion in more debt than since the GFC, itself a debt induced crash. So what happens if we see another crash soon? Well back over to you Mr Fisher

"The Fed is a giant weapon that has no ammunition left."

 

Silver Poor Man's Gold in Short Supply


You may have read the article on Bloomberg titled "Why Poor Man's Gold May Be About to Get More Investor Love" http://www.bloomberg.com/news/artic...-may-be-about-to-get-more-love-from-investors. It was largely pointing to the gold : silver ratio (as we reported recently), falling supply, and the recent record inflows into silver ETF's as investment demand surges (see below).



However the article included a statement by CPM group's Jeffrey Christian that they had 'mixed minds' about silver based on his assertion that silver was in oversupply. But for some strange reason CPM do not include investment demand in their demand calcs. If you take the GFMS Team (Thomson Reuters), who include investment demand, numbers you get a very different outcome. Christian also talks of concerns about industrial demand for silver in a sick global economy but this ignores the main uses of solar, electronics and medical that tend to be less sensitive to such growth slow downs and indeed the relative size of growing investment demand overcoming any decline.



The Bloomberg report is otherwise bullish on silver's prospects, and the above clarification removes the rubbish from CPM out of the equation. This again reaffirms why many are calling silver the most undervalued asset in the world right now. Tomorrow we will discuss the effects of just a small percentage of the investment world moving to it.

 

The BIG Silver Squeeze

Yesterday we spoke about predictions of a silver price breakout on the back of the sky high Gold Silver Ratio, diminishing supply and growing investment demand. What is lost on many people however is the size of the silver market, both in supply and current demand. Relative to other financial investments, both are extremely small. How small? Well 1% of global investment is often quoted for precious metals and silver is likely only 1/3 of that at best.

We've spoken before about this and we think it is one of the most critical points for consideration. To graphically quantify this, the analysts from SRSrocco put the following chart together with SilverDoctors who have a guess at silver representing 0.5% of global investment demand (but themselves admitting it is probably on the high side).



The point of this illustration, when considered beside the annual silver deficits depicted in yesterday's chart, is that we already have a net deficit on current demand. They calculate current physical investment silver demand (so to be clear, excluding the massive ETF inflows also depicted yesterday) at 240m oz in 2015 (check out the growth since 2007 too!). Applying their 0.5% investment market share estimate to that figure and you see very clearly the impact of just a 0.5% market shift into silver, let alone 4-fold to a still relatively low 2% of the market. That the current 0.5% is in all likelihood lower just magnifies the set up. It is hard to imagine the price action on such an occurrence.It would be a squeeze in the truest essence of the word.

Finally, whilst most Gold Silver Ratio talk is centred on reversion to the mean, the chart below needs little explanation as to a broader context for this high GSR

 

US Shares Warning 2 Things to Watch

Whilst the Aussie All Ords had its worst day in 3 weeks yesterday, US shares continue their resurgence since the big drops in January and February this year. There are however a couple of things to watch closely if this is to be sustained.

Firstly, as Bloomberg reported below, it's being driven almost entirely by one buyer. The companies themselves.

"Demand for U.S. shares among companies and individuals is diverging at a rate that may be without precedent, another sign of how crucial buybacks are in propping up the bull market as it enters its eighth year.

Standard & Poor's 500 Index constituents are poised to repurchase as much as $165 billion of stock this quarter, approaching a record reached in 2007. The buying contrasts with rampant selling by clients of mutual and exchange-traded funds, who after pulling $40 billion since January are on pace for one of the biggest quarterly withdrawals ever."

Thanks to the near zero interest rates available and record corporate debt takeup, US companies are borrowing to buy back their own shares and prop them up. But this is coinciding with contracting earnings. As Bloomberg reports:

"During the last two decades, there have been two times when earnings contractions lasted longer than now. Both led companies to slash buybacks, with the peak-to-trough drop reaching an average 62 percent."

In other words the only buyer in town may run out of funds to buy back their own shares and thus remove the majority of market support.

The second thing to watch is the technical set up at present. Whilst some may be taking some comfort from the recent rally, the fact is that after the August 2015 falls (see the chart below), the ensuing rally didn't get to the previous high. The January and February falls we just saw, formed a lower low than August. SO, technically if this current bounce (dead cat anyone?) does not go higher than the November high we will have seen a lower low followed by a lower high. That ordinarily confirms we are about to head down, possibly way down

 

Fed Turns Bear, Gold Soars - But US Shares?

Yesterday we discussed how company buybacks are propping up a US sharemarket that should be falling on poor and reducing earnings. Last night typified this market based on free money not fundamentals. The US Fed announced 'no rate hike' but also turned decidedly dovish in its forecast amid a weakening global outlook. So of course gold surged more than any other asset class last night on the news (see the chart below), up over 2.6% (in USD)... BUT shares too rallied, up 0.7%? This is yet another example of bad news being good news for shares. Fundamentals are bad, but that means more free money and debt fuelled buying so up go shares.



This is not a new thing since the GFC. But what we've seen more of in 2016 is a market starting to realise that this is a giant Ponzi scheme and that maybe these central bankers don't really have control, hence yesterday's article on the exodus of 'real' investors, replaced by company buy backs. So last night's rally could soon see the penny dropping sell off. These daily gyrations are all what you might call 'micro' moves. Tomorrow we will share with you something a little more 'macro' that could portend a big move being imminent.

 

Last Time This Happened > GFC

Last night saw the S&P500 rally and finally break even for the year (whilst spot gold is up nearly 19%). Last night's rally was again entirely due to central bank stimulus. More stimulus = lower USD = higher commodities was last night's story with oil back up over $40. In our article yesterday and in today's podcast we discussed another counterintuitive move on the US sharemarket. But one or two days do not make a trend

Recently Casey Research (one of the better around) spoke to the chart below. All those little jagged moves of the green line (S&P500) are the 'micro' moves we spoke of yesterday. Sometimes stepping back filters out the noise and looks at bigger trends afoot. The blue line is the 9 month moving average and the purple line is the 27 month moving average much longer terms than the usual 50 and 200 day moving averages you often see on charts. You will note they are very close to crossing again. They explain the significance as follows:

"You'll see that this only generated two signals in the last 10 years. If you sold stocks at the bearish signal in 2008 [when the lines crossed], you avoided a 43% drop. If you bought stocks at the bullish signal in 2010, you made 68% in a huge multiyear rally.

Today we're closing in on a bearish signal. You can see the two lines coming together quickly. Unless stocks have a dramatic surge, they'll cross. This would generate the first bearish signal since 2008.

There's nothing magical about this tool. It simply filters out noise to objectively measure whether we're in a bull or bear market. But I wouldn't bet against it. And unfortunately, it suggests we're rapidly approaching a bear market."



So this is the 3rd article this week on the US sharemarket you say? The old saying of when the US sneezes Australia catches the cold has always held. When (not if) this crash comes, down we go too.

In Australia we still haven't even managed to shake the last cold and get back to pre GFC sharemarket highs and that was over 8 years ago! Indeed since the All Ords hit its peak in November 2007, it is still nearly 24% below that today. Gold on the other hand (in AUD) from that same day is up nearly 76%. In other words you were 100% better off being in gold since November 2007. Now have another look at the chart above with those dates in mind

 

By the way, keep up the good work. We read this stuff!! )

 

The Fed's Deal with the Devil

Today's AFR runs an article by (London) Telegraph's Ambrose Evans-Pritchard ("Fed makes a Faustian pact with inflation" p21). Colloquially you may know a 'Faustian Pact' as a 'Deal with the Devil'. From the article:

"Interest rates in the United States have fallen to minus 2pc in real terms and are dropping into deeper negative territory with each passing month. This is a remarkable state of affairs.

It is clear that the US Federal Reserve is now trapped. The FOMC [Fed committee] dares not tighten despite core inflation reaching 2.3pc because it is so worried about tantrums in financial markets and about that other Sword of Damocles - some $11 trillion of offshore debt denominated in dollars, up from $2 trillion in 2000.

The Fed has been forced by circumstances to act as the world's central bank, nursing a fragile and treacherous financial system struggling with unprecedented leverage.

Average debt ratios are 36 percentage points of GDP higher than they were at the top of the pre-Lehman bubble in 2008, and this time emerging markets have been drawn into the quagmire as well by the spill-over effects of quantitative easing. Like it or not, the Fed is stuck with the task of cleaning up a global mess that is arguably of its own making."

The problem with this procrastination/meddling is that it exacerbates the problem when finally addressed (too late). The last example we saw of this before the GFC was when the Fed's Greenspan slashed rates after the Asian Crisis but held them low too long enter the dotcom bubble.

There is a double benefit for gold in these circumstances. Gold historically loves negative real interest rates (interest rates less inflation). The US is there as mentioned above and some countries (Eurozone, Japan, Switzerland etc) actually have negative interest rates - NIRP (even before inflation adjustment). Australia is about nil. Since introducing that policy Japan has sold out of safes as people are hoarding cash. Inflation still erodes cash value whereas gold usually protects against inflation. All that printed money since the GFC could well see a sudden surge in inflation if we actually see the velocity of money respond at last.

The second benefit is that history is littered with examples of the Fed tightening too late. When it finally acts, it causes a market crash. We'll leave you with the final paragraph of the article accordingly:

"The world's financial markets chose to celebrate Janet Yellen's reprieve on Wednesday. But there is another side of this Faustian pact. The tightening shock will be even more painful when it finally comes."

 

Profiting From The High AUD

Not many analysts predicted an AUD at 76c around now. A combination of better than expected (but questionable) domestic economic data and the rest of the world sinking into zero or negative rates makes our still yielding dollar look comparatively good. Indeed if you check out the chart below (courtesy of Morgan Stanley Research) only the NOK (Norwegian Krone) and the NZD offer a better return (after volatility adjustments) than the AUD, and all 3 higher than the 'mighty' USD. It's this carry appeal that sees a flight to the AUD and hence a stubbornly high rate in the face of our post mining boom economy.



But the BIG question is 'for how long?'. Well when the world's biggest (by far) asset manager is in the press yesterday calling a "mid- to-low 60c level" AUD by year's end it is certainly worth noting. BlackRock have an incredible US$4.6 trillion of assets under management. For perspective, our biggest bank, CBA is a fifth the size with AU$0.87 trillion.

One thing is certain, our RBA and exporters do not like a circa 76c AUD and there will likely be moves to get it down. The median forecast amongst analysts is 70c by the end of 2016, 8% lower than now but much higher than BlackRock's call. BlackRock think the RBA will be handed the excuse (need) to cut rates via poor GDP growth for the rest of the year, predicting 2% as opposed to the 3% we saw last year, which they say "will open the door for rate cuts and, if it opens the door for rate cuts, that opens the door for a lower Aussie dollar," "Over time, albeit in a fairly volatile fashion, we'll still get to the mid- to-low 60c level by the end of this year."

Gold and silver provide an easy currency play. A move from the current 75.85c to even their high range 65c would see the current price of gold and silver rise nearly 17% to $1915 or $24.40 without any change in the USD spot price.