Silver Seek: These Two Charts Virtually Scream Buy Silver
Article by Hubert Moolman in SilverSeek
Silver is currently trading around $14.84 an ounce. This is around 30% of its 1980 all-time high of $50.
However, this is an incomplete representation of what silver is really trading at, relative to US dollars.
When you look at the silver price, relative to US currency (the amount of actual US dollars) in existence, then it is at its lowest value it has ever been.
Also, it is ridiculous that one ounce of silver cost $50 in 1980 when there were about 132 billion dollars in existence, whereas today it is only $14.84 at a time when there are 3 304 billion dollars in existence.
The US monetary base basically reflects the total amount of US currency issued. Originally, the monetary base is supposed to be backed by gold available at the Treasury or Federal Reserve to redeem the said currency issued by the Federal Reserve. This is not the case anymore, therefore, the amount of dollars have grown exponentially over the years.
In 1980, the all-time high was 0.361, whereas the ratio is currently at around 0.004. The US monetary base is currently around 3 304 billion dollars (or 3.304 trillion). Therefore, if silver was today at its 1980 value, relative to the monetary base, it would be around $1 193.
If the current pattern follows, then we could have a big rally, after breaking out of the triangle consolidation.
Based on this comparison, buying silver now is like buying silver back in 2003 when it was under $5 per ounce.
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