Unsuppressed Silver Price Chart

[beauanderos]

Wish I knew how to construct a chart, but oh well... If silver had kept to the "historical" ratio of 16:1 since 1980, then these are the prices we would have seen:

1980 $50:$850
1981 $28.75:$460
1982 $23.50:$376
1983 $26.50:$424
1984 $22.56:$361
1985 $19.81:$317
1986 $23.00:$368
1987 $27.93:$447
1988 $27.31:$437
1989 $23.81:$381
1990 $23.96:$383
1991 $22.62:$362
1992 $21.43:$343
1993 $22.43:$359
1994 $24.00:$384
1995 $23.99:$383
1996 $24.23:$387
1997 $20.68:$331
1998 $18.37:$294
1999 $17.43:$279
2000 $17.43:$279
2001 $16.93:$271
2002 $19.35:$309
2003 $22.68:$363
2004 $25.60:$409
2005 $31.25:$500
2006 $40.00:$640
2007 $52.50:$840
2008 $55.00:$880
2009 $67.93:$1087
2010 $87.81:$1405
2011 $89.06:$1425

We all fall prey to normalcy bias, in this case the norm being the suppressed silver price which had been held down for literally decades.We need to adapt ourselves to a mode of recency bias, wherein recent events become the new norm. As one can clearly see, had the ratio of free market silver floated at the approximate historical ratio of 16:1, we would all have been accustomed to much higher silver prices, and the recent strong uptrend would not have caught so many off-guard and stimulated presumptions that silver was in a bubble.
Will silver revert to its historical ratio? History says it will, given time. One can thus ascertain that a fair price for silver would be $90, and this would only be true if gold held steady... which it won't. Gold will rise as a result of unconstrained money printing, and silver will rise commensurately... but at a faster pace until it nears, reaches, and then exceeds its historical ratio. Neither metal has surpassed its inflation adjusted high.

[neilgin1]

i thought i was being wild eyed by projecting $250 in the third hyperspike, but given S/D figures, i'd say more like a $1000 oz....silver that is.

"and you were buying it for $10 an ounce?!?'''

yes i was.

[Rosco]

That is a reasoned premise but think that the 16 to 1 was set by USA government due to requests by western mining interests

On that basis the ratio might not be true based on cost of production as most Silver is by product of base mining with only 10% or less of production
from Silver only mines their could be an entirely different ratio

[Treetop]

One could argue that the price wasnt suppressed at all.(not that i am) Our country in particular had insane amounts of silver that we flooded the market with for some time. Is this the only reason silver didnt track its historic ratios? personally i dont believe so. It has extreme value in many key areas of our high tech infrastructure and gadgets. So there are solid reasons why industry and even governments would see benefit to price suppression.

But really none of that matters. That massive silver hoard is indeed gone. Whether there was additional pressures directed at silver or gold for that matter doesnt matter. Gold alone is a solid investment. As the worlds fiat systems crumble. systems that rewarded indebtedness. Its a failed paradigm whether many of us want to admit it yet or not. The numbers will catch up to us in time. Gold cannot be printed and as such will only rise long term for some time to come. ... and silver? the metal that we used up, that also cannot be printed, that also has been money as long as gold, well theres less of it then there ever was when it had its historic ratios. Many will say silver is industrial, and yes this is true, but its held a place as money every bit as long as gold for the same reasons.

Can anyone give me a reason besides those billions of ounces of american silver flooding the markets why silver hasnt tracked its historic ratios? Perhaps Ive missed it, but Ive delved into the issue and found nothing.

now that this hoard is gone, what is keeping silver from tracking or beating historic ratios? Nothing but past expectations as far as i can see. As far as im concerned, unless someone figures out how to mine seawater super cheap silver will revert to historic levels without a single doubt in my mind. much more then that likely since weve used up so much of it, but historic levels in the least. New mining operations could chug it out feasibly at historic levels in relation to new gold, feasibly this could keep it at those historic levels or there abouts.

[68Camaro]

I forget what column I was reading this past week (I get a few), but the a claim was again repeated (which I've heard before) that there is now more refined gold in reserve than silver. Something like twice as much, which is a complete flip from the historical norm. That the market just hasn't yet compensated for this, fully, but is in the midst of doing that. That the silver traders have been manipulating the market (of course a common claim for many years.) Thus the 2x run-up in price in the past 8 months. So while the price of silver probably will never reach gold levels, since (with a 2-4 year lag) mining and recovery can stimulate more production of it as well as lowered industrial consumption as engineers find alternatives to more expensive silver, I think there is a good chance we could see triple-digit silver soon, and have it last. Not sure we'll see 4-digit silver (unless you count it in an badly inflated dollar where a pound of coffee costs $100 or more).

[beauanderos]

Eric Sprott is one of the more reputable sources (Jason Hommel seems a bit out there to me) that claim that we're out of silver NOW. That large amounts can't be sourced, their own Sprott Asset Management having to wait six months just to fill their order for 500 million worth. The Canadian Mint states the same thing. Reliable estimates place above ground gold as being between five to seven times more available for investment purposes than is silver. Industry has had years to find and utilize less expensive alternatives to silver and has done what they could to implement those cost-saving productive methods, yet industrial usage continues to climb. Scientific advances will only accelerate the uptake of industrial silver in such applications as nanotechnology, and investment demand is subject to an immense increase if the less than one percent of funds that are now directed to that arena ever increase. Alot of pension funds and hedge funds have begun to add gold to their holdings, but few if any have allocated silver. It's possible, with the advent of higher prices, that previously worked then abandoned mine shafts and tailings could be reopened (Shafter mine in Texas by Aurcana, Sunshine Mine in Idaho by Sterling and now up for bids) but that would only incrementally increase silver productivity. Along with every other element, silver is on the verge of experiencing "peak silver" and if, as is stated, it's true that there is only a nine year supply of silver left in the Earth's crust predicated upon current depletion rates, then time indeed will tell if we see an astronomical price movement this decade. I think we will and am basing my decision such, if I'm wrong I hurt no one... but if I'm right

[Redneck]

Will silver revert to its historical ratio? History says it will, given time.

I don't think so.

China is in the mix now.

All bets are off.

>

[psi]

It would seem that in 1980 there was considerable resistance to silver at $50 in terms of buyer confidence. If the price approaches or clears $100 in terms of today's dollar I will not be surprised, but my gut tells me that a steep decline may follow soon after that. Who knows though, big changes are taking place in the world economy.

[neilgin1]

Ray beauanderos,

you're a dangerous man, sir.

Everytime i read one of your posts, i have a desire to go onto a Ebay, and just slash and burn, snipe, to get the rolls of silver i desire.

but i really need a BCS tiller/tractor and a 4by 4 small 6 pick 'em up truck first! you're killing me!!

neil

[Lemon Thrower]

That is a reasoned premise but think that the 16 to 1 was set by USA government due to requests by western mining interests

On that basis the ratio might not be true based on cost of production as most Silver is by product of base mining with only 10% or less of production
from Silver only mines their could be an entirely different ratio

you have hit upon a kernel of truth but missed the forest for the tree.

the big picture is that until 1792, the GSR was from 12.5 to 17.5. once the u.s. got involved it was not always market based but politics based. so you have a point but its a small one. through most of human history the GSR was very close to 16.