2011-02-18

There goes silver, will gold follow?

Zero Hedge had the chart of silver backwardation up yesterday. It's popping today for reasons specific to the silver market, but this is not as isolated as it seems, since it may have to do with physical supply constraints in the trading market. King World News has been all over this story.

A long-term chart of the gold/silver ratio shows that silver is nearing its high point for the past couple of decades (the gold/silver ratio is near a low point). I have no guess as to whether it will break into a new range or not. However, I expect gold prices will head higher and therefore, silver can still move up even if it loses relative ground to gold.

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