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Silver Price Forecast Scenario Analysis

  • We did some silver price scenario analysis last week. Hopefully it will not confuse you. There is a relationship between Gold and Silver called the Gold to Silver Ratio (GSR). It refers to the amount of silver you can buy with one troy ounce of gold.

The silver price analysis in the table attached is based on the GSR. In the last few years the GSR was 80 to 85. With gold on a rocket lately and industrial demand for silver dropping, the GSR in the last two weeks had increased to near 100. Silver bulls (people who expect silver price to go up) say that Gold and Silver occur in nature at a ratio of between 1:10 and 1:20. So a GSR of 1:85 to 1:100 makes silver ridiculously cheap.

This may incentivise silver buyers to jump into the market. FYI in past gold and silver bull markets, gold would lead and silver would lag. But in the tail end silver would outperform. For example between 2008 and 2011 the gold price went up 117% but the silver price went up 400%. This is what silver bulls are sniffing.

The table below shows silver price predictions based on gold price and GSR. 

  • Yellow is bearish
  • Green is neutral
  • Blue is bullish

Silver Price Forecast Scenario Analysis as at 9 March 2020 based on likely gold prices and possible Gold to Silver ratios

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