In late 2008 you would have got about 83 ounces for one ounce of gold, today you'll get 35 ounces per ounce of gold...you kind of missed the boat....When/if the gold silver ratio hits 20:1 I'll probably trade half my silver stack for gold...If I were you I wouldn't play the G/S ratio game, I would keep my gold and stack what ever amount of silver you can even if it's only an ounce or two per month. http://goldprice.org/gold-silver-ratio.html
If you can make the exchange back and forth without paying much/any premium, then I'd do it. The GSR has moved heavily in the way of silver lately, but I think it's still got a ways to go. Most of the people I encounter who plan to swap are silver owners who will swap for gold once it hits 15:1 or less. I have a feeling that the mania for silver will get a little more frothy than gold and we may over shoot the 15:1 GSR. At that point, it's POSSIBLE that exchanging silver for gold is the savvy move. However, the best bet in the future may be to sell directly to the industrial users. However, if you have to pay the spread when you trade for silver and then again when you trade back, I'd sit tight with gold. It may have been difficult watching silver run up so much faster than gold, but that can only go on for so long.
Oddly enough, the advice I received only yesterday from whom I trust most, was for me to consider swapping silver for gold NOW, with intention of swapping back a bit further down the line. The only other time they suggested the same for me was back in 06, and I made a great gain at that time. Not sure if I will participate on this round.. FWIW... Lucy
Was going to suggest he try alchemy. But it's not as profitable as going 1oz Silver to 1oz Gold. Think he's going to lose money on his alchemy endevors.
I'd keep the gold. Silver has had a 100% rise in the last 8 months, it can have that kind of fall too. The price is being driven by speculators on the futures market, nothing else, and when the game gets too rich for which ever side that is participating in it, (A certain TBTF bank and some unknown big investors), this could very well reverse itself. Speculators are pouring money into silver futures then taking a huge premium to settle on cash because there isn't any silver on hand to cover the shorts. On the other hand, gold's rise is related to the destruction of the $ at the hands of the Federal Reserve, and failed economic policies of the USA. Good bet this isn't going to change anytime soon.
Howdy, I've been following the GSR for years and have invested accordingly. As mentioned, just a year or so back it was 83:1 and now it's 34:1. From everything I've read, the historic range for this ratio is between 15:1 and 20:1. Indeed, at the peak of the 70's bull in early 1980, gold topped out at 850 and silver at 50 . . . or 17:1. I'd stay overweight silver until the trend changes. rono
The gold/silver ratio is a garbage analytical tool. I would try to keep yourself roughly 50/50 in each metal because NOBODY knows which one will outperform in the future unless one or the other is wildly over or undervalued based on its own fundamentals, and this is not the case at the present time. However, if you own gold and find that the bid/ask spread from swapping into some silver is too high in your area, I'd just keep what you have.
I couldn't agree more. It's just an wrap-up of trends in the past, and has zero relevance to present/future anything.
Indeed. The ratio is a hold over from Colonial & Revolutionary times where the English and American governments simply defined the dollar to be a ratio of the two metals. This definition hasn't existed for close to a century so the ratio between the two is irrelevant. i.e. It's a garbage analytical tool.
Excuse me? I disagree. By following ratios for quite a while now, I have made more than double my $ by swapping at the appropriate time. And I'm including after paying long term capital gains and any fees. It works for me. Lucy
I am of the opinion that the purchasing power of silver has never been higher in the last 25 years and believe moving it into other commodity - hard asset investments may be a good move. Since most here are coin collectors I'll throw you this eample. 1883-CC MS-63 Morgan Dollar. 10 years ago it would take 25 ounces of silver to purcahse today only 5 to 6 ounces. This holds true for just about everything - land, corn, wheat, copper, steel, cotton, oil, consumer goods, etc. I am not saying that silver will not go higher - just that it has entered the clubhouse turn and the rest of the field is going to close heading into the stretch.
Howdy folks, With regard to using the gold/silver ratio as a metric in buy/sell decisions, I'm going to have to side with Lucy. No disrespect to cloud, fatima or bodie and I'll even concede that the GSR is articificial. Cripes it was imposed by Newton when he was over the mint. You folks are missing the point. It doesn't matter if the GSR is true or real or based upon facts - all that matters is that enough people believe that it matters and behave as if it does. It's the behavior of humans that move markets and what they believe to be true is what they base their investment decisions upon. As I pointed out in another thread, it's analogous to the 50 and 200 DMAs and even Santa Claus. The 50 and 200 DMA are used in charting stocks and Technical Analysis and their movements and interactions are the basis of many buy/sell decisions (e.g. the golden cross). Now are 50 and 200 important for any reason? Nope. Only that they are what most people use that do this stuff and thereforem, the fact that they use it give it meaning - they give it life. Same/same with Santa. Not real, but how many believers acting as if he were - or pretending he's real for their kids - and spending a lot of money on the falsehood of Santa Claus. Hey, no doubt that in the long run, the truth will out and everything will revert to the mean but as Keynes said, 'in the long run, we'll all be dead'. Where the action is in in the short run and the divergences from the norm. And there is also no doubt that decisions makers are always seeking the best and most current data upon which to base their decisions. Doesn't mean they'll get it and doesn't mean the information isn't false or misleading. And it doesn't mean they don't get swept up in the given mania of the moment. We've witnessed it so many times - dot.com, real estate, now gold and silver in recent times. Countless examples in history. As an investor, what do I care if folks are being stupid? I'm trying to make money. And this is the nut. With the investing crowd that I've been chatting with online for over 10 years, I've been called all kinds of crazy for investing in pm's. They've sited stats and made arguements proving I was nuts and that gold and silver were terrible investments. Hey, you've heard all their stuff. Since 2002, how many people have you told to buy gold and silver. How many did? How many looked at you like some sort of rabid dog? just some thoughts, peace, rono
If more than a small handful of investors were using the GSR, it wouldn't fluctuate so much. People seem to have a need to find order in situations where cause and effect relationships just don't exist. There are reasons to expect silver to outperform gold [e.g., lower inventories, small investor demand, industrial demand] and reasons for gold to outperform silver [e.g., central bank reserve holdings, immunity of demand to recessions, suitability for large investment positions]. No doubt some people will attribute future movements to the GSR, but I don't think enough money is using the indicator for it to move the market price.
