if you look at the two years past the silver has been on an uptrend, actually, going back, the current uptrend goes back to november 2008 and the price level then was 9. i'm not sure what the generally considered price movement fibonacci ratios or whatever there are, but a return to double the last bottom seems like a reasonable long range (3-6 month) retracement. that would put the price around 18. if we assume a real inflation rate based on PPI of about 15-20% over the same period, that's an uderlying 32% at that bottom end 15% number, during that two year period, that puts the underlying fundamental minima of about $12. so i still stand by my prediction of ~15 dollar silver within the next 6 months.
right now, the biggest spike in real demand is the retail market in small lots of minted coins, this can be seen in the climbing premiums where some retailers are putting a ~33% markup over spot. this is a signal to mints that if they can ramp up production they can profit. this can't happen at present because most silver is now tied up in large bullion bars of 1 kilos and up, locked in vaults. in order to meet the retail demand we actually need those big players with their hundeds and thousands of kilo bars to put them back on the market so they can be poured into blanks, printed up and distributed to retailers. and to do that the price has to fall very significantly on the spot basis in order to have the big holders drop it.
there definitely is a situation of two separate markets for silver, and the price on the retail bullion coin and small bar market is a huge arbitrage opportunity, and the utilising of this opportunity will start, and indeed show with a pretty big dip on spot. right now the dip has to do with the fact that supply has been squeezed to almost nonexistent. while one theory might suggest this means that price should be higher, i think that when it hits a certain squeeze point the delays on delivery and comex fulfilling silver orders with a 30% over premium, simply, the interest in buying has dipped, 'buyer fatigue' as some people are saying. it's gonna continue going up and it's gonna go well past the 31 dollar peak for sure, but the market has to loosen up more before it can continue, and more of the silver has to be divested from comex and put in the hands of independent businesses, of which one major segment will be mints. ounce coins will be very unlikely to drop much below about 25 but spot is gonna go right down to at least 18, in my opinion.
or some perth mint 20 ounce shineys ... prices look tempting ... arggh but not ... just ..... yet ......
Not sure which historical ratio they are talking about cause i would guess it has changed quite a few times.
