Dr. Krauth spoke about his views in Toronto at the PDAC 2022 Conference.
Gold-Silver Ratios
In his book, “The Great Silver Bull,” Krauth used technical analysis to establish a silver price of $300. He considered the gold-silver price ratio, and it was above its typical average. This implies that silver prices have greater potential to rise.
“The ratio is currently at 82,” he added. “It has generally averaged about 55 to 60 in the last 20 to 30 years. We are already well above the average… If you look at how it’s behaved, its pattern indicates where silver will trade relative to gold. So I think that if you’re looking for a decent target, the ratio is most likely going back down to somewhere around 55 to 60. That’s a reasonable objective. And in a speculative frenzy, I don’t see why it would not go as low as 15.”
According to Krauth, the ratio might possibly fall as low as 9 owing to the fact that 9 oz. of silver is mined for every oz. of gold that is extracted.
As of this writing, the spot price for gold is $1,850 per troy ounce, whereas silver costs about $21.75 per troy ounce.
$5K gold
In his book, Krauth offers a model that predicts gold’s price will reach $5,000 by 2030, which would cause silver’s price to climb to $300. This is due to the fact that gold is used as an inflation hedge.
“If you look at what’s going on with inflation today and how some other assets are hurting,” he continued, “gold is effectively flat since the beginning of the year… The chances of gold hitting the $5,000 mark are based on the growth in inflation and money supply. And the likelihood that money supply and inflation growth will be more than what we’ve seen in the last 10 to 15 years is quite high.”
He added that he is not the first to predict a gold price of $5,000 or more.
“I’m not alone in believing that gold will increase to $5,000 or possibly even up to $10,000 in a super speculative environment,” he continued. “You have got people like Shayne Maguire, Jim Rickards, who ran a gold fund for the teacher’s retirement system in Texas; and Scott Minerd of Guggenheim.“
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