By the numbers

Most folks look at the current dollar price of Gold & Silver and think, Wow thats high. We here at mytwocent$ like to let the numbers be the judge.... 

There are roughly 5 billion ounces of Gold above ground at roughly $2000 the ounce means Gold is a 10 trillion dollar market.

There are roughly 1.25 billion ounces of silver above ground at roughly $40 means Silver is a 50 billion dollar market. 

Several things jump out when looking at the above two sentences. First, above ground gold is 4 times as plentiful as silver. So if gold is priced fairly at $1850 - one could argue based on availability silver should be $7400 the ounce. Yes, you read that correctly.

Second, the 10 trillion dollar Gold market is 200x the size of the paltry $50 billion silver market. Considering the two metals are found in the earths crust at a 15-1 ratio AND above ground silver is already rarer than Gold then silver at $650 the ounce would make the silver market 1/15th the size of the current  Gold market.  

 According to Gmans own website in March 1933 there was 20 Billion dollars in circulation, which was justified by Gmans decree making Gold $35/oz. A similar ratio today with 4.4 trillion in circulation (250 fold increase from 1933) gives a Dollar price today of $7700/oz.

 In 1935 a Barrel of oil was 67 cents, today its $90. Thats a 134 fold increase. The same for Gold would put it North of $4700. 

In the 1930's Gold & the dow traded at a 1 for 1 ratio, same thing was true in 1980.  To reach that ratio today - Assuming the Dow is fairly priced, Gold would have to trade over $11,300 the Oz. 

 In terms of percentage of global assets, from 1921 - 1981 Gold & Gold Mining shares averaged 26% of worldwide assets. Even at these "outrageously high gold prices" today, that number today is 1.5% (source: Erste group). So just to return to the historical average valuation for gold would require a 17 fold increase from here… $31,000/oz - for those scoring at home. 

The last 11 years, Gold has returned 20% per year, that pace puts the dollar Gold price at $16,500 sometime around 2020.  To be blunt, Bagholder believes this $16,500 estimate to be too Low. Price appreciation rate is always quicker in the second half of Bull markets. 20% per year will be pedestrian the next decade. 

The Idea that we could discover a new Gold mine tomorrow which would flood the market with new supply of Goldis absurd. All gold mined last year combined, added less than 1% to the existing above ground supply. Even if they discovered a new mine that would produce double what the richest mine produces today; that 1% yearly figure would still not be breached. In math terms, the new mines production is statistically insignificant. Besides, depending on the country where its discovered, the best case is it would be open in 10 years, worst case is it never gets opened. 

The silver price chart for the last 30 years is one giant "cup" of 30 years with a "handle" of 5 months (so far). Edwards & Magee (technical analysts extraordinaire) would say that from the bottom of the cup to the top is a 1600% increase, therefore after the breakout above $50, silver has a green light to $800/oz (that is a 1600% increase which equals the size of the cup). 

The current Gold bull market is ten years old, the two biggest corrections so far are 29% in 2008 and 23% in 2006. By comparison the 1970's bull had corrections of 39% &  52% along the way. This speaks to the tremendous underlying strength of & gargantuan size of,  the current bull specimen. The reason the corrections this time around have been shallow is because it has been under steady accumulation by those of us in the know. Before it gives up the ghost a decade from now - there will be multiple 50% off sales.  Only the staunchest bulls will pass that test.

Bagholder is firmly on the record as stating Silver will trade  with 4 digits to the left of the decimal & gold will trade with 5 - both before 2020.