I know not everyone likes what the CPM Group has to say on the metals markets but I think it is high quality work. The latest piece below addresses the gold:silver ratio and how all the PM bulls point to the current level as a turnaround spot.
Here’s the preview to the CPM Group research…
Silver people keep talking about the gold:silver ratio. The ratio is around 85:1 on a spot basis as this is being written, having averaged 85:1 in October. Commentators, producers, and others keep saying that whenever the ratio has gotten to 80:1 in the past it has quickly reversed and fallen sharply as silver has gained value relative to gold.
That is almost true.
There was an important period of more than three years, from August 1990 until November 1993, when the ratio reached 80, blew right past it, rose to 100, and stayed above 80 for maybe five years. Just because the ratio is above 80:1 and a great deal of people are desperate to find reasons to say they are bullish about silver, there is no reason to believe that this ratio will soon fall sharply.
In fact, the experience from 1990 through 1993 is very important, and bears important warnings about the current situation in silver prices. There are similarities between the two periods which could bode ill for silver prices.
Click here to read the full report.