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<p>[QUOTE=&quot;InfleXion, post: 1351728, member: 29012&quot;]What your data proves is that when the dollar is not backed by gold that the correlation between gold and silver is less consistent. I would expect as much. However, as I&#039;ve pointed out before the correlation has been very consistent since the year 2000 when the recent bull market began, so your last point is only valid in a vacuum. </p><p><br /></p><p>Anybody who believes that money is not going to return to a gold standard may feel free to do so, but central bank buying and parabolic buying of gold in China begs to differ. We can pick our timelines to make whatever point we want, but the question is not what timeline is appropriate, but rather what situation is imminent. The timeframe without a metal backed currency is the anomaly in history, therefore if anything that is the timeframe I would be most apt to dismiss in my analysis, and if and when there is a return to a gold backed currency I would anticipate the relationship between gold and silver to revert to its behavior prior to 1971. </p><p><br /></p><p>The reason why the gold standard was even capable of ending 40 years ago was because in 1832 silver was demonetized. Otherwise it would not have been possible on a bi-metal standard to swap one metal for paper currency outright. Silver was demonetized because the gold to silver ratio was fixed way back in 1791 by Alexander Hamilton shortly before implementing the first central bank of the US. A fixed GSR is not what the founding fathers intended, and its folly is that &#039;good money drives out the bad&#039;. People will play the fixed ratio against the free market ratio to profit, and the bad money will disappear from circulation. This is why silver was a monetary metal, and should be again, with a floating ratio as was originally intended. If not silver, then some other metal that constitutes the definition of money. It was an unsustainable path, and I question whether Mr. Hamilton knew this, and whether it played a role in his duel with Aaron Burr.[/QUOTE]</p><p><br /></p>

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