Carlos Lam

Silver Prices Are About to Fall

"Sovereign demand can potentially support gold against both artificial price suppression, and its inverse relationship to the dollar. There is no sovereign demand for silver."

Let us assume you are correct. Currently, the silver-gold ratio is at 62-1. The most recent peak was about 80-1 in Feb-03. If gold remains at about $1100 and the ratio revisits 80-1, that calls for a $13.75/oz. silver price. An $11/oz. price (with gold at $1100) would mean a 100-1 ratio; not impossible, but highly unlikely.

Now, if gold were to retrace some gains, obviously silver could fall as well. However, with the Indian and Chinese "puts" on gold now extant, any correction in the gold price would seem to be short-lived.

Silver Prices Are About to Fall

On Nov 05 02:31 PM Russell Upsomgrubb wrote:

> Warren Buffett is perhaps the most successful investor of all time
> and just bough Burlington Northern, making a huge bet going forward
> on the growth of the American economy over the next 5-10 years.

The BN purchase can just as easily be viewed as a bet that commodities (i.e. coal, grain) will be transported by rail to our west coast ports en route to China and India. Moreover, it can be viewed as shorting the U.S dollar inasmuch as BH will be using cash (and borrowing some as well) to purchase a hard asset (the railroad).

> Mark Faber, a doomsayer, claims the value of the
> dollar will eventually fall to zero. Gee, I'll bet he owns a lot
> of gold.

Dr. Faber is correct: all fiat currencies eventually fall to zero. Gold, on the other hand, is money and has been so for 5,000 years. I disagree with Dr. Faber that we will experience hyperinflation in the next few years, but I do believe that we will experience high inflation here in America given the Fed's relentless money printing.