Goldman Sachs seems to be in agreement, issuing a 12-month silver price target of $28.20 with silver slipping as low as $24.70 in the next three months, while gold's one-year target is $1,690 an ounce after falling to a three-month low of $1,480.
"There is overhead resistance in silver," said David Morgan, founder of silver-Investor.com, "the ratio will favor gold" for a while. The ratio refers to how many ounces of silver it takes to buy an ounce of gold. The ratio fell to as low as 31 when silver hit a recent intraday high of $49.82, and has now risen to 40. "We're seeing gold outperform silver on a ratio basis ... I'm not that eager to get back into the market," Morgan said. Morgan thinks the ratio could move even higher, as much as 50:1, which implied more downside from the $36 level, but that long term he is sticking by his ratio of 16:1. "The fundamental fact remains that you cannot print wealth, and as long as Federal Reserve Chairman Ben Bernanke and other central bankers in the world try to print wealth you're going to have more and more upside for the metals," he said. The Commodity Futures Trading Commission's bank participation report for May shows that gold long positions fell 7% as of May 1 compared to April 1, but short positions stayed relatively the same, whereas silver's long position rose 25% and short positions fell 18%.