All Signs Point To A Silver Bull Market Ahead [iShares Silver Trust (ETF), SPDR Gold Trust (ETF)]

silver bullPeter Krauth: If you’ve been watching silver for some time, you know it’s been in the doghouse.

After peaking at $49 back in April 2011 the white metal is down 60%, having languished between $19 and $22 for the past two years.

But a confluence of factors is building that make today’s silver prices look downright cheap.

Here’s how the bull is going to run – and how you can ride it all the way up from here…

The Pattern: Where Gold Goes, Silver Follows

To explain how the precious white metal behaves, I like to use the phrase: silver is like gold – on steroids.

What I mean by that is, when gold starts to move, whether down or up, silver tends to follow its lead. But its losses or gains usually magnify those of gold.

Gold’s bull market started back in 2001 from a bottom of $256. It eventually peaked in 2011, turning in a gain of 642%.

Silver bottomed at $4.15 in 2001, than peaked in 2011 at $49, having gained 1,080%. So, from peak to trough, silver’s gain was nearly twice that of gold’s.

That leverage looks very exciting, but investors need to be cautious and recognize that it works both ways.

Since those highs, gold has retreated 32%, while silver’s off by 60%. Again, that’s a nearly 2:1 magnification that shows these metals are tied together.

These Indicators Are Undeniable: Silver Bull Market Ahead

In order to gauge how silver is priced relative to gold, one useful tool is the gold-to-silver ratio.

We calculate this indicator by simply dividing the gold price by the silver price which, right now, yields about 67. In simple terms, that means right now an ounce of gold will buy roughly 67 ounces of silver.

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