Gold vs silver 2019

Discussion in 'Bullion Investing' started by myownprivy, Aug 14, 2019.

  1. -jeffB

    -jeffB Greshams LEO Supporter

    Do you honestly believe, though, that the magazines were not biased?
     
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  3. yakpoo

    yakpoo Member

    Ok...I'll take a shot. The short answer is that these are two different commodities whose supply/demand dynamics are quite different. Silver is an industrial metal produced as a secondary metal in just about every type of mine. Gold has some industrial uses, but is mostly used for Jewelry and Coins as a liquid store of wealth.

    Supply/Demand can fundamentally alter the relationship of the two commodities. During strong economic times, Silver may rise in value relative to Gold due to industrial demand while money flows out of Gold and into Equities. During weak economic times, Silver may drop (weak demand), while Gold may rise as a hedge against lower interest rates and a weaker Dollar.

    In either case, the ratio between Gold and Silver changes from one extreme to the other...but (so far) in a range between 45 and 85 (a few spikes higher and lower).

    Gold-to-Silver-Ratio-Long-Term.jpg

    Given that the value of the Dollar is a constant at any moment in time, the price relationship between Gold and Silver should accurately measure the relative supply/demand for the two commodities.

    However, with that said, you also have speculators who drive prices based in irrational fear/greed. Although gold and silver are different, they both maintain their unique relationship to fiat currencies...in this case, the U.S. Dollar.

    Speculation plays a much larger role in the price of PMs than industrial supply/demand. Generally, when one PM rises or falls an inordinate amount relative to the other, that is the result of speculation and an opportunity to make some money when the GSR reaches extremes.

    I don't trade the GSR myself, but was reading where some folks in this situation are buying out-of-the-money Gold puts and Silver calls. This strategy makes money when the GSR drops...regardless of whether there is a rise in Silver or a drop in Gold.

    I'm not endorsing any GSR strategy...just trying to answer the question.

    As far as 2019 is concerned, Central Banks around the world are having a race to see who can devalue their currency the quickest...which puts upward pressure on PMs (relative to the denominated currency).

    I believe that Silver speculators are still licking their wounds after President Obama raised margin requirements 11 times in three (3) weeks in 2011. That effectively popped the Silver bubble. I think memories of 2011, plus increasing supply/demand for Silver, has speculators putting their money into Gold instead of Silver.

    SILVER:
    Annual-Total-Supply.gif
    Annual-Total-Demand.gif

    GOLD:
    Charts_Gold-Annual-Total-Supply.jpg
    Chart_Gold-Annual-Total-Demand.jpg

    What could change? ...an improving economy that pushes the demand for silver higher. It takes time to bring low margin mines back online, so silver prices (buoyed by speculation) could come back inline with Gold...or even exceed.

    Is that likely? Probably not as long as a global recession persists. However, a significant resolution to the current trade wars will be very bullish for Silver. That's when I'll take a look at Silver. Currently, Silver is at (or near) production costs. It could drop lower than production, but that will just take mines out of production.

    Long term, current prices for Silver are attractive (imo). I made many posts when Silver was $35/Oz to say that Silver shouldn't be accumulated again until it drops below 18/Oz. Well...here we are!

    Ok...what's my grade?
     
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  4. yakpoo

    yakpoo Member

    Things were definitely different before the internet. We had some big shade oak trees a ways out of town where we would meet on Saturday mornings to work on our cars, listen to music, and drink beer. Good times!
     
  5. -jeffB

    -jeffB Greshams LEO Supporter

    Saturday mornings were for sleeping! (After I got old enough not to clamor for Saturday morning TV cartoons...)

    Now, Saturday night? THAT was TELESCOPE time! No school the next day, so I could stay up as long as I needed to. I sure do miss dark skies. :(
     
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  6. Bman33

    Bman33 Well-Known Member

    I’ve read about “Playing the GSR” on this site and others. I also listened to a presentation on it at my coin club. I actually was tempted to trade gold for silver but never pulled the trigger. My gut tells me that playing the GSR is an obsolete model like has been said by others in this thread. I treat them like two very separate commodities. Gold for low risk and silver a little riskier but not too Much. If my 401K starts tanking that usually means gold and silver are going up. So it’s a little insurance.
     
  7. itm389

    itm389 Member

    Silver has to gain 194% to reach its all time highs. Gold only has to go up 28% to reach its all time highs. If silver follows gold like it usually does with rallies, silver is a better buy right now in my opinion. Gold is also trading under some pretty heavy resistance right now around 1522. The same area on the silver chart is around 26 bucks possibly 31 bucks cause silver came down a lot harder than gold did on its first leg down from the top. I'm gonna sell a good chunk at 26 if we get there. Also 31ish is the 50% retracement which would be a good area to unload some also if we get there.
     
  8. Bman33

    Bman33 Well-Known Member

    I started "dollar cost selling" a little gold and silver here and there. I am by no means dumping it all but it's a good time to get a little cash and pay some unforseen medical bills. Glad the timing was good so I din't take any losses.
     
  9. Rono

    Rono Senior Member

    Howdy,

    What Yakpoo said and very well said, I might add.

    and so it goes,

    peace,

    rono
     
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  10. imrich

    imrich Supporter! Supporter

    Only a complete fool would accept a challenge to disprove that the Numismatic publications don't try/hire the best knowledgeable individuals writing for their magazines, intending to provide an excellent resource for the subject indicated.

    I believe you'll find that social media doesn't necessarily hire the same types, but maybe those capable of being able to redirecting individuals for corporate profit, misleading by presenting nebulous alternatives to that desired in stated subject request.

    JMHO
     
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  11. -jeffB

    -jeffB Greshams LEO Supporter

    Canceling two of the three negatives, then paraphrasing, I get:

    "You'd be a fool to accept a challenge to prove that numismatic publications hire the best and most knowledgeable individuals, so they can be a good resource."

    Simplifying further, I get:

    "Nobody can prove that coin magazines hire the most knowledgeable people."

    I'm guessing that you meant the opposite...?
     
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  12. princeofwaldo

    princeofwaldo Grateful To Be eX-I/T!

    I would eat my PC (keyboard and all) for a chance to have World Coin News return to it's peak advertising period some 25 years ago. Just the $60 and under ads took up 7 or 8 pages of copy many months, and had some truly great deals to be had. Didn't take long to figure out which dealers knew how to grade back then and which ones didn't. Almost everything raw, sometimes Superb GEM coins sent out at UNC prices...,,.. awe geez don't get me started(!)
     
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  13. WoodyWW

    WoodyWW Junior Member

    More & more "mainstream" (meaning, those who are usually focused on equities &/or bonds, not PM) money managers are getting into gold. I read Barron's & watch Bloomberg, & there is much more discussion of gold than in recent years; but I never hear silver even mentioned.

    - Edited -

    I wish silver would go back up to $25 or $30.....I sold some of mine when it was last $30 & $40, but should've sold a lot more.
     
    Last edited by a moderator: Aug 28, 2019
  14. masterswimmer

    masterswimmer Well-Known Member

    @WoodyWW nice infusion of politics in CT.
     
  15. Revi

    Revi Mildly numismatic

    We're over 18 now, and it looks like it might hold. Silver is back!
     
  16. myownprivy

    myownprivy Well-Known Member

    Yes, but Woody is correct, these are self inflicted crises.
     
  17. myownprivy

    myownprivy Well-Known Member

    Follow up to my opening post 14 days ago:

    Gold's low for the year was $1167. Today, August 28, it is $1540. It is up over 24%

    Silver's low for the year was $13.86. Today, August 28, it is $18.38. It is up over 24%

    The big news is that now gold and silver have performed equally well. Both are up slightly over 24%
     
  18. itm389

    itm389 Member

    If gold holds and stays stable i think we could see another leg up in silver. Gold is hitting long term support now turned into resistance. The same resistance level on the silver chart is around 26. We need to break 21 though first thats gonna be tough. Also anyone see platinum today? It launched like 50 bucks today haha.
     
  19. princeofwaldo

    princeofwaldo Grateful To Be eX-I/T!

    Agree that $21 an ounce silver is the magic number to break on thru to the other side, and I would guess there is a ton of resistance between 20 and 21.

    Hadn't paid any attention to platinum this week. Yep, that was a quite a move today and has to make you wonder how much of it was speculative. Anyone who watched what platinum did in the summer/fall of 2008 has to know it doesn't behave much like a precious metal. The swan dive into oblivion in 2008 was unlike anything I've ever seen before. Was as if the 737-MAX stall control software had engaged plunging platinum prices into the ground at full throttle.
     
  20. itm389

    itm389 Member

    Its just crazy that silver hasnt even broke above its 23.6% fib yet. Gold is up above its 50%. So much more upside expected with silver imo. Silvers 50% is $31.73.
     
  21. TheFinn

    TheFinn Well-Known Member

    I remember the days when you could buy dynamite if you had a plausible reason to need it.
     
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