The gold price is making new all-time highs. This is hiding the epic undervaluation in other assets in the precious metals universe. Silver, gold miners and silver miners are hugely undervalued right now.
Related – our gold forecast is now confirmed while our silver prediction of $34.70 should be underway.
We believe a re-balancing move is underway.
- Silver should rise – the time is NOW as explained in silver’s most important time window is here.
- Gold and silver miners are hugely undervalued, their rally should have legs.
We visualize the epic undervaluation of silver, gold miners and silver miners with 5 charts.
1. Silver has a tremendous upside potential
Very often, we look at long term charts, think the 50-year silver chart. However, those long term charts are not actionable, they also may take many years until they develop a trend.
The 15-year silver chart makes it very clear, though – silver is eager to stage a break out – it might do so in this current cycle.
Below is the monthly silver price chart. This is a very bullish cup and handle formation, a bullish pattern that is tremendously powerful.
Silver is undervalued but not for long – that’s the message of this bulish silver chart pattern.
2. Gold miners didn’t even break out yet
Gold miners rallied in recent weeks.
In the bigger scheme of things, the recent rally it is a non-event.
Fireworks will start once the secular breakout will be confirmed – the HUI gold mining index says it all – once above 300 points, gold miners will be on fire with the rally of recent weeks representing a warming up period.
The undervaluation of gold miners will sooner or later be something from the past.
3. Gold miners to Dow Jones ratio: an epic quadruple bottom
While the gold mining chart, shown above, is fascinating, it only partially explains the undervaluation of gold miners.
The true undervaluation of gold miners becomes clear once we express the gold mining index HUI in terms of the Dow Jones. The HUI to Dow ratio is setting an epic quadruple bottom – this might mark the start of a re-valuation of gold miners which should be a long term process.
4. Silver miners priced in silver – an epic bottom
In the precious metals mining space, the most fascinating chart comes from silver miners when priced in silver bullion.
Below is the SIL to silver price ratio.
As seen, silver miners priced in silver are confirming an epic bottoming. Big picture, the chart pattern that comes to mind is a W-reversal. If that’s the dominant pattern, silver miners are set to rise tremendously.
The silver mining undervaluation might soon come to an end provided silver miners priced in silver bullion experience a secular W-reversal.
5. Silver ETFs – potential catalyst for the long awaited silver short squeeze
We believe that a spike in the price of silver might occur in the coming 8 weeks. Why? Because of the silver shortage we have been writing about – please read Silver Shortage: A Closer Look at Market Dynamics In 2024.
Here is the point, as noted by Ted Butler: with the rise in the price of silver, investors are purchasing SLV ETF and PHAG, the two largest silver ETFs. The accompanying chart, provided by GoldChartsRUs, illustrates the significant decrease in physical silver held by these ETFs in recent years. As demand for these ETFs increases, the Trust must deposit physical silver in one of their warehouses. Consequently, the current physical silver shortage could escalate out of control. We are witnessing the initial effects of this phenomenon, as evidenced by the substantial increase in physical silver holdings in the two largest ETFs.
Conclusion – an epic undervaluation in several gold & silver assets
Silver, gold miners and silver miners are tremendously undervalued.
Precious metals valuations might drastically change in the coming quarters and years.
A re-balancing act might have started. It might take many quarters, up to 3 years, until these precious metals turn their undervaluation into a correct valuation.
If you are looking for more detailed analysis, on multiple timeframes, we recommend to read our latest precious metals alert: [MUST-READ] The Ongoing Silver Rally – Will It Become Historic (log in required), published on April 6th, 2024, featuring 24 must-see gold & silver charts. Sign up to our premium gold & silver service to receive our weekly, detailed gold and silver market reports.
