I love the chart not because I think it is right but rather because it makes my book's Silver $60 target look reasonable and sane.
I was saying to my pal @PeterNBell over a beer on Friday night that when I wrote the book I did not want to be that Gold $5000 guy. Nor do I want to be the silver $840 guy. Both numbers would be total disaster for the USD and, frankly, for life as we know it. We do not want the silver stackers and the preppers to be right.
Peter is a math guy. So Peter noticed that the title of my book Gold $3000 | Silver $60 implied a gold silver ratio of 50:1. To be honest, I really had not thought of that. I was looking at historical rallies rather than the actual arithmetic.
Now, Egon von Greyerz, apparently a noted precious metals analyst, is thinking that the G/S ratio is more likely to revert to its 1720-1880 range of 15:1. No, really.
Amazing as that would be for $GPLY.v and $BHS.v (not to mention folks like $VIT.V and $GPY.v or $MOZ.t and $WGO.v as it implies the dreaded $10,000 gold) I am pretty sure we have moved on from the American and French Revolutions, the Napoleonic Wars and such like. The Industrial Revolution has, well, happened. Fiat currency had been invented and widely used and abused.
These sorts of wonderfully "data-driven" dives into metals pricing are, however, useful because they indicate sentiment. Egon von Greyerz is not an idiot. He runs Matterhorn Asset Management AG in Switzerland and was buying gold in the 1990's for $300 an ounce.
Is he wrong? For my children's sake I hope so. But there is a shot that he and other gold bulls are right. Silver bulls even righter.
Their downfall, if they have one, is that they want to hold the metal. In a gold and silver rally, even one which takes gold to $10,000 and silver to $840, it is the junior explorers, developers and producers which will go parabolic as people scramble to get in on the run.
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