Stoking the Furnace

Another day, another dollar - well actually another few billion dollars with an added confirmation there will be as many more as neccessary !

This is the fuel to stoke the 'Silver-Train''s furnace, and with the end of week rally above $14, it appears the market may be catching on.

We mentioned fundamentals in a previous post and with the central banks apparent determination to destroy paper money it would be a good time to highlight silver's relationship to gold when both mediums were used as money.

The longest term ratio of silver to gold, in a monetry environment, is 16:1 ( incidentally China has previosly used a ratio of only 10:1.) However, with Nixon's move off a gold-backed currency, the ratio was thrown completely out of kilter rising to over a 100 ! The ratio today is about 56. Our reading of this, is that with governments printing more money now than EVER before, thereby destroying its value, there will be a move back towards monetry valuations. Even if the gold price were to remain unchanged ( not likely ) then the silver price could triple from here. This is only one of a number of fundamentals pointing to the deeply undervalued nature of this forgotten metal.