The Silver Ratio

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Issue No. 3154 - $1.00 Home Archives Contact Us Privacy Policy

Friday December 24, 2010

Market Minute: A Sign of the End? What Happened: A hedge fund announced plans to utilize Twitter updates as a '4th dimension' of its investment strategy. What it Means: There is too much optimism in the markets, and too much easy money, if this fund successfully raised $25 million. If this fund is trusting 190 million Twitter users to measure sentiment, we aren't far removed from the 'dot com' excess of the late '90s. Why it Matters: As we mentioned earlier this week, market sentiment is swinging too far to the bullish side for our liking. A correction is getting more likely. Suggested Action:Pay close attention to your position sizing and stop losses. The First Major Shift in Business Thinking Since the 1937 Publication of Think and Grow Rich Michael Masterson's New York Times and Wall Street Journal bestseller, Ready, Fire, Aim, lays out a completely new approach to business and life. It's the blueprint that helped Michael go from pool installer to self-employed multimillionaire before his 40th birthday. And it's so practical and sensible that just about anyone can use it to make their first $1 million... $50 million... $100 million... or more! Find out more here! Profit Opportunity: The Silver Ratio Yesterday, we introduced you to Porter Stansberry, the founder and director of Stansberry & Associates Investment Research. He predicted the collapse of Fannie Mae and Freddie Mac and many of the corporate bankruptcies that occurred during the financial crisis. Now, he is predicting the collapse of the dollar. He says it is imminent... and investors need to prepare for it immediately. Today, I am going to share with you three ways Mr. Stansberry says you can protect yourself as the dollar collapses. History Repeats Itself For most of history, there has been a consistent relationship between the price of gold and the price of silver. Called the "silver ratio," it's typically around 16-to-1 (i.e., the price of an ounce of gold will be 16 times the price of an ounce of silver). From time to time, governments attempt to manipulate this figure, or a major silver discovery causes the ratio to fluctuate, but in free markets it eventually returns to about 16-to-1. Gold is currently around $1,385 an ounce. So, based on the ratio, silver should be around $86 an ounce. But it's not. It's only $29 an ounce. That's a 47-to-1 ratio. With the current ratio significantly out of whack, Mr. Stansberry recommends investing in "cheap" silver. If silver does get to $86 an ounce to bring the ratio back in line, you stand to make almost 200%. Mr. Stansberry also believes that gold has a long way to go given the bout of inflation headed our way. He sees gold hitting $2,000 an ounce, at which time silver should be worth $125 an ounce. That would be a 331% gain based on today's prices. But one of his currency experts, Chris Weber, says silver is likely to go even higher – to $187 per ounce. That would represent a 545% gain for those astute enough to recognize the imbalance. Some investors shun silver because it is an industrial metal and, therefore, they don't believe it is a reliable inflation hedge. Yet over the last decade, silver has outperformed gold. Gold has gone from $256 to $1,385 an ounce, a 441% gain. Silver has gone from $4 an ounce to $29 an ounce. That's a 625% gain. So how should you go about investing in silver? You could buy the silver ETF (SLV), Silver Wheaton (SLW), silver coins, or old silver currency. Stansberry & Associates has put together a guide that details ways to hold silver yourself, where to safely store it, and much more for members of their Stansberry Investment Advisory newsletter. To get a copy of "Secrets of the Silver Market," click here… $5,000 a month in online revenues... starting from scratch... in as little as 90 days! With the Internet Money Club, you can turn your dreams of becoming a successful Internet entrepreneur into reality. You will be learning from some of the industry's leading experts -- all of themcommitted to making sure you succeed. But you must grab one of the last remaining spots! And 90 days from now, you could be earning your first $5,000 in online profits! Click here to learn more... I can't describe how helpful ETR is "I've been subscribed to your newsletter for a long time, and I can't describe how helpful ETR is. You give a lot of support – and in most cases, your articles seem to be written for me. Thank you for drawing my attention to some details which I hope will finally put me on the path to a better, richer life." Theo P.

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