Pretty soon people may be looking to do some silver for gold trading. This article shows some silver strength in the near future. http://www.kitco.com/news/2013-08-2...-Strongly-During-Rally-Of-Last-Two-Weeks.html
I think in 2008 it was actually at 33-1 ratio if I remember correctly. Thats the last time it was under 40-1. Right now I think we are at 59-1...Still way to high for me.
If you are a believer in the ratio, how can it be really used to determine if silver is a buy or not? Maybe Silver is priced correctly and you should be selling Gold. That would get the ratio back in line right? Maybe they are both overpriced, it is just that Gold is overpriced more, and you should be selling both or Gold is priced correctly and you should be buying Silver. There is just no way to determine by looking at the ratio.
Considering that the gold/silver mining extraction ratio is only 8:1 at best, and that the gold/silver available supply ratio is more like 1:10 I would not even consider swapping out of silver into gold until 20:1 and then I would do portions in stages on the way down. That is unless I needed to bug out in which case I would want gold. I wouldn't be surprised to see silver at parity with gold once fair value is in play. It's far more rare above ground, and far more useful. That being said, I still like gold as an investment, just not as much as silver.
OK, that is quite the statement, let's take a looksey at it. First off, the statement strongly suggest that fair value is not in play and silver is artificially undervalued. So lets look at it from that angle. I will assume for arguments sake that you are correct. So silver is trading at about $23 an oz. current date. Now let go back 200 years and silver was trading at a dollar. We adjust that to inflation and we get Silver was trading at $33.00 inflation adjusted in 1800. That is very close to the value now. Sooo, if we believe fair value is not in play now and it would be trading at a parity with Gold at $1300 plus if it was in play, the only logical conclusion to draw is, fair value was not in play in 1800 either. I mean, are we saying, $33 (inflation adjusted) WAS fair value in 1800 but the fair value has skyrocketed to over $1300 now. That would just not make sense, especially considering it is so much easier to mine silver now with all the technical advances we have made. The only conclusion to draw is that silver has been artificially suppressd for over 200 years. BTW, we can take that back even further, possible thousands of years, but lets just stick to 200 years for now. So the question being, why in the world could you possible think that fair value could magically come into play during your life time, when it hasn't for WELL over 200 years. That is certainly not a bet that I would like to take with an all-in philosophy. That is simply playing the wrong side of the odds. I mean, not only does your unsupported wild logic need to be correct, but the sitution needs to be fixed in the next 50 years or so, when it has been broken for over 200 years, and more likley thousands of years. Like I said, bad odds for an all-in bet, but hey people play the Hard 8 roll in craps every day, to each his own.
I simply would never trade silver for gold, or gold for silver. One, you will be incurring transaction costs. Two, I find people that play with their stacks to end up losing it. Simply change which pm you buy if you believe one is a better bargain than the other at any given moment. Slowly acquiring is the turtle strategy I use with pm. I stopped when silver got over $25, and have had fun the last few months buying some more again.
Not exactly. The inflation adjusted high for silver is $800/oz in 1998 dollars a few centuries back. I don't know what that would be today, but you're not going back far enough and the limited perspective you've imposed is misleading. Again, you are imposing a misleading scope. The gold/silver ratio was fixed in 1791 at 15:1. The free market was ignored after that and fair value was lost. Again, you need to go back farther. Even the Coinage Act of 1792 is not an ideal resource. You will have to go back farther than that and look at free market forces if you want to know the last time we had fair value. Of course that was prior to dollars as we know them today, during a time when all other assets were valued in grains of gold and silver. So all we can really deduce is that an ounce of silver is worth an ounce of silver unless you want to look at it from the perspective of money supply divided by metal supply which is the only reliable indicator in my book. If you want to go way back in time to the BC days silver and gold were at parity for a time in Egypt prior to silver refinement being commonly understood. It doesn't just fall out of the dirt like gold. So it has happened before. Fair value will come into play when the physical market is sparse enough to require it. I believe it could come into play in my lifetime because of the nature of exponentially growing debt. Allow me to elaborate on exponents. [Kudos to Chris Martenson for this analogy]: Take a sports arena, and put 1 drop of water in it. This is a special drop of water, it grows exponentially every minute. 1 minute passes: 2 drops another minute: 4 drops another minute: 8 drops, then 16 drops, 32 drops, and so on. Hours may pass without anyone noticing the tiny puddle on the floor. It might take a few days before that arena gets to 10% full of water. But after that it would only take 5 minutes to fill the entire thing. People would stampede for the door but it will be too late by the time they notice it. There was more than adequate advance notice, but they didn't heed it. Anything growing exponentially is not to be taken lightly, but when that thing is debt which burdens our citizenry it is of paramount importance. In my view you are the one rolling the dice by assuming that things can continue to go on like this. I am playing it safe. And since I don't plan on selling my stack for debt-based fiat currency I have no risk on my "bet". I was betting my whole life by holding fiat dollars, and now I've exited the casino. Your perspective is inverted. Once things revert to equilibrium we will have a window of opportunity at fair value before the next oppressive system comes into play. Additionally we are at a unique point in US history where there is literally zero government stockpile of silver. They can't even adhere to their own laws around silver eagles which require all silver used to make them to be mined in the US, because demand for SAE's alone exceeds all the silver mined in the US in a year. Of course all the prices I am discussing are in USD. China has plenty of gold and silver and so their prices will much more affordable in their (much stronger due to having metals) currency going forward. The US/EU empire currently sets the price of metals, and once they lose that ability (COMEX inventories running out of gold faster than ever) the current manipulation scheme will be over, and it remains to be seen whether a new one will (or can) take its place (it would have to come from China/Russia/India since they have all the metal). However they have no incentive to suppress the price because they will be the beneficiaries of rising prices. Why do you think they have been telling their citizens to buy gold? Additionally, due to continual inability for silver mining supply to meet yearly demand coupled with declining ore grades (hence 8:1 GSR mining ratio instead of 15:1, silver is becoming scarce underground faster than gold due to being deposited only epithermally [near the surface of the crust] where as gold is deposited both epithermally and mesothermally [deep veins]) there will inevitably come a day where the price will have to be set by the physical market, and then we will see fair value going forward. There could also potentially come a day where silver is more rare than gold underground if the trend continues. If these things do not occur in my lifetime then my children or their children will benefit, but I am my own central bank acquiring my own generational wealth in real assets, not IOU's with counter party risk and no intrinsic value. How much is trust worth? Opinions will vary. For me you can't put a price on it. The price is whatever I can afford. Apologies for the thread drift, but these things need to be understood if we are to prosper as a nation in the years to come.
Please give me the source for saying silver traded at parity with gold in ancient egypt. I have read extensively on the subject throughout the middle east and europe, as well as china and india, and have never read such a claim except for maybe a few months because of some calamity. Regarding "scarcity" of silver, i see the opposite. I believe way too much silver is being mined as copper and tin byproduct, much more than the market wants. That is why the ratio is down imho. Until the copper and tin stops being mined, i see the silver/gold ratio to be similar as today.
This argument doesn't seem very rigorous. Where is the evidence that debt is growing exponentially? Which debt are you referring to? How does growth of debt correlate to the price of silver?
Inflexion, both Chris and Mush are correct. It is not debatable, it is not opinion, it is just fact. In addition, your post was riddled with at least a half dozen more inaccuracies. We could tear them apart one by one, but instead, I like to simply suggest that if you need to resort to posting falsehoods to make your point, maybe your point is just very weak to begin with.
