Silver Worth $150-$170?: Facts to Make The Case for a Major Price Surge - October 31, 2024

The price of silver is often overshadowed by its flashier cousin, gold. While gold has been hitting new highs, silver is still playing catch-up. But that might not be the case for much longer. With some key historical trends and the current market setup, silver could be on the verge of a massive breakout, potentially heading toward $150 – or even $170.

Let’s break down why.

Silver’s Untapped Potential: Looking at Historical Highs

Silver’s all-time nominal high was around $50 an ounce back in 1980 and 2011, during a period of economic turmoil and high inflation. Adjusting for inflation, that 1980 high today would be around $150. Yet, silver is currently trading at a fraction of that, hovering near $32.50 per ounce.

So, why the lag?

Silver’s price often plays catch-up with gold. As gold breaks new records, silver tends to follow but with a more explosive upside potential. If we look at where silver should be based on its historical peaks, it’s clear there’s significant room for growth. If gold continues to rise, history suggests silver could make a much bigger move.

The Gold-Silver Ratio: A Key Indicator

One of the most telling signals for silver’s future price is the gold-silver ratio. This ratio simply tells us how many ounces of silver it takes to buy one ounce of gold. Right now, the ratio is hovering at around 80:1, meaning it takes 80 ounces of silver to equal the value of one ounce of gold.

Recent history, this ratio averages closer to 50:1, and during times of significant economic change (like when the gold standard was removed in the 80s), it even dropped to 30-40:1. But on a multi-century basis, the ratio was steady at 15:1.

Here’s how silver could perform if the ratio tightens to these historical levels:

• 80:1 ratio = $32.50/oz Silver (Close to current levels)
• 60:1 ratio = $43/oz Silver (A 35% increase from today’s price)
• 40:1 ratio = $65/oz Silver (A 100% increase from today’s price)
• 30:1 ratio = $87/oz Silver (A 170% increase from today’s price)

The historical precedent for the ratio tightening is there, and when it happens, silver tends to outshine gold in terms of gains. This is why many investors keep an eye on the ratio. It’s like a hidden map pointing to silver’s true potential.

The Inflation Factor: Why $150 to $170 Silver Is Plausible

Inflation is another crucial factor. When we adjust silver’s 1980 high to today’s dollars, the price shoots up to approximately $150. Interestingly, this number isn’t just some fluke. If we use a 15:1 ratio (the long-term historical ratio) and today’s gold price of a recent average of $2,600, we get a silver price of $170.

That’s right: $170 per ounce of silver is not some wild guess. It’s what the market could reasonably reach if inflation, historical ratios, and gold’s continued rise all align.

Why $170 Silver Isn’t Crazy: The Big Picture

At first glance, calling for silver to jump from around $32.50 to $170 might seem like a wild prediction. But when you dive into the historical context and current market conditions, it’s not so far-fetched.

• Gold is soaring: As gold continues to break new records, silver, which often trails gold, could be poised for an explosive catch-up. Historically, when silver starts to rise, it tends to do so in dramatic fashion.

• Inflation-adjusted highs: Back in 1980, silver hit an all-time high of about $50 per ounce. Adjusted for inflation, that’s roughly $150 in today’s dollars, suggesting silver is still massively undervalued at its current price.

• The gold-silver ratio: This long-term relationship between gold and silver prices is another key indicator. With gold currently around $2,600 and the multi-century ratio at 15:1, silver could theoretically reach $170 per ounce if that ratio reverts to historical norms. Even if the ratio only tightens to 30:1 or 40:1, we could still see silver prices rise significantly.

So, is the idea of $170 silver really that crazy? Not when you look at the trends. History has shown us that silver has a tendency to make rapid, outsized gains when it catches up to gold. And with inflation, historical ratios, and the current surge in gold all aligning, silver could be setting up for a major breakout.

Final Thoughts: Is Silver the Next Big Opportunity?

While there are never guarantees in investing, the potential for silver to reach $150 or even $170 seems more plausible than ever. Between the inflation-adjusted historical highs, the tightening gold-silver ratio, and the momentum in precious metals, silver could be one of the most exciting opportunities on the market right now.

If history is any guide, the answer is clear: silver might just be the next big thing.

Courtesy of Neptune Global

********