By Dominique de Kevelioc de Bailleul
If there was ever a sleeper asset poised to moonshot, it is silver. And $150 is the target price for the white metal on this next major move higher, says Swiss money manager Egon von Greyerz
“We could see those levels ($4,500 – $5,000 on gold) within a year and possibly much faster,” von Greyerz tells King World News, Thursday. “This autumn we are going to have a very strong move.
“If we look at silver, silver is going to move a lot faster than gold. The same technical target for silver is $150. That would move the gold/silver ratio down to 30/1.”
With PIMCO’s bond king Bill Gross going on the record today on CNBC, saying an open-ended quantitative easing program by the Fed is all but a “done deal”, silver investors can expect, not only a massive and unprecedented short squeeze in the silver market, but momentum traders and value-based accumulators hopping on board the silver bullet, as well—a veritable trifecta of rocket fuel presently under-appreciated by the casual investor, according to von Greyerz.
A move in the silver price, from $30 to $150, is “hard for investors to comprehend, but this will happen because we have had an energy building up in these markets for almost a year,” von Greyerz continues.
von Greyerz outlook for the silver price is, indeed, the most optimistic of King World news legion of forecasters, but the chart shows that his assessment has much technical evidence to support his thesis, given the fundamental backdrop of bizarre monetary and fiscal policies endemic to both major reserve currencies, the dollar and euro, which, together, comprise 89 percent of all global currency reserves.
Consider the ramifications of two formally announced QE’s by the Fed and the response exhibited in the silver market since the fall of Lehman Brothers in Sept. 2008. Silver’s eye-popping move of 486 percent, to a few cents of $50 in late April 2011, from an intraday low of approximately $8.50 at the height of global market hysteria in Oct. 2008, captivated the global financial community to such an extent that, even CNBC couldn’t ignore the story—a sure sign of an intermediate top was in for the price.
Today, after months of relentless hype of a European collapse, not only has the euro held up well against another ‘flawed currency’, the dollar, but the silver market revealed to those in the bullion business the underlying extraordinary demand for the physical product buried underneath the dormant price action.
That disconnect between demand and the JP Morgan price suppression scheme will prove again that Gresham’s Law is alive and well—too well, in the case of silver, as investors will come to see.
“So the coming move is going to be spectacular,” Greyerz speculates. “The ascent is going to be mind boggling.”
If the 486 percent move in the silver price within 30 months is used as a guide to the potential of the next phase in that market, a base of $27.50, formed, tested, and retested over and over during the most recent 16-month consolidation, a similar move takes the silver price to $161.
Is $150 for an ounce of silver unreasonable on top of a backdrop of countless trillions of dollars pumped into the banking system, on both sides of the Atlantic? Of course, the answer is: it is not. A better question is: how long will it take before silver reaches $150? Greyerz suggests 12 months, maybe earlier.