Next Level: GOLD $1,350.00

CURRENTLY:

GOLD: $1,294.90 -- High so far today $1,297.20
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Silver: $21.21 -- High so far today $21.26

Platinum: $1645
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Palladium: $557​

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Lucy: Another CT'er, whom you may have read posts in this forum by, Cloudsweeper99, turned me onto Rob McEwen after I mentioned seeing him once talking about PMs in a TV interview. While it's rather dry talk, he spoke at a 2009 investor conference and discussed the gold to djia ratio that I mentioned.

If you like to watch his presentation, it is available in three parts on YouTube:

Minera Andes 2009 AGM Rob McEwen Part One Two Three

The presentation runs a bit shy of 30 minutes. His historic djia/gold chart is in part two, at the 2:30 minute marker.

 

Well the ratio has been adhered to for at least 4,000 years of human history up until the last 40 years or so. I am not sure that is a folly on its face. The 16:1 ratio was used since it is a rough indication of relative scarcity of the metals in the earth.

The folly would be to say that since there is such a large ratio now, silver must go up. Why doesn't anyone make the argument that gold has to come down? There is nothing at all to say which way PM's prices would move to get back into the historical ratio, if they were to do so. The other major fact that I believe the ratio will not move back to historical levels is there are certain cultures, not having much input historically into the European exchange ratios, that have a nearly endless demand for gold as culturally gold, and only gold, is a guaranteed store of value and is used intensively in weddings, gifts, etc. My wife is from this culture so I experience it first hand. She always wants me to buy more gold.

 

supply and demand has defined the price of PMs for an equal amount of time

 

I would be very hesitant to look at this ratio as well, for all of the reasons you have stated Krispy. They have nothing to do with each other, especially with gold being a more worldwide commodity. To me the gold/silver ratio has much more validity, though I do not think it will return unless both metals worldwide go back to being seen as simply stores of value. They aren't, gold is the store of value and silver an industrial metal. That is why the ratio is now broken.

I think stocks were oversold for a couple of decades, now PM's are being oversold to investors, that is why I am not a buyer now. I respect your beliefs Krispy that they have a long way to go up, but I believe that would only be true in relation to the US dollar if it keeps falling, not for the rest of the world. To me, these high prices are bringing online too many new sources of production to be sustainable. All across the west and Mexico and South America there are abandoned mines being reevaluated for opening. At $5 silver they were played out, at $20 they are very attractive. I still remember the Egyptian mine of the pharoahs being reopened recently after 1800 years of being closed. High prices will bring high production.

 

So supply and demand has been constant at 16:1 for over 4000 years, never varying? Kinda hard to believe that in no period of time one would not be demanded more than the other.

Edit: You could be right, its just I have seen the ratios in action in hundreds of cities over thousands of years based upon numismatic evidence. It never varies more than 15:1 to 16.5:1, and even those variances were short lived.

 

Sorry for chopping up your post; I tried to change the font color and it just crashes my ancient Mac, hence the chopping.. Thank you for your response. What I really wanted to say was that silver has room for movement, and at least try to show that silver has value other than that of forks and knives and electronics and antibiotics; it's been a measure of wealth for a long time. No more, no less. No sales pitch to buy or sell, or follow someone saying "swap" or "hold".
Respectfully, Lucy

 

No, supply and demand are not a constant, that's the very point of how that works, that it does wavers and therefore so does pricing, differently between metals or anything else, thus not a good comparison in ratio between them. Supply and demand has not been constant nor has any ratio between commodities, gold is an unbiased form of money whereas a charted ratio can be constructed to sell people on one thing or another by a weak argument designed to be persuasive at best by neglecting factors of supply and demand, or so it occurs to me and my limited ability to eloquently explain this... but then I haven't been around for thousands of years to be an eyewitness to history either.

 

I totally agree... silver has plenty of upward room for growth, but some may not be buyers despite this depending upon how long they've been in and goals they originally sought to achieve, and others have room to go if they have only been in a short while, they may have more time to invest and more time for growth potential. A year in at this point, and you have quite some (potential) for potential gains.

 

This is sort of what I was trying to say about that in my earlier mention:

"they both have enormous potential for continued growth and I would not (personally) choose one over the other, but rather hold both for unique reasons and unique potential (until something else should be a better investment and PMs liquidated), but above all, both will remain in demand for the foreseeable future or until something else could be agreed upon to replace them."

 

Of course I was not there, but I am talking about gold and silver metal content of coins and their relative value to each other in monetary systems. A silver coin of 8 grams is worth the same as a gold one worth .5 grams. There is remarkable uniformity throughout the ages, all at 16:1. Copper is all over the board since it was a token currency, and not meant to be a bullion based store of value.

Edit: Just want to clarify again I agree with Krispy the ratio now is broken, just wanted to add history behind ratio

 

p.s. Krispy, I hope you did find my comments tucked into your post; I just couldn't make it look different (italicizing was OBVIOUSLY not the right choice

I imagine we ALL agree, silver could either go up or down, so could gold!

 

Yes, I found the italicized comments you put in there.

 

CURRENTLY:

GOLD: $1,293.70 -- High so far today $1,297.20
​

Silver: $21.19 -- High so far today $21.26

Platinum: $1647
​

Palladium: $559​

​

 

Why not ?

 

What I find interesting is that there are more ounces of gold in above ground storage than silver. Since most of the silver mined today is consumed in various industrial applications, it is now the more scarce metal from an investment standpoint. The potential implications of that for silver prices is staggering.

 

why not what?

 

Krispy, you have a very dry sense of humor, I think! (snicker (Ha ha! Why not what?) Sheesh!

 

Yes, I think that is accurate. However, the question simply made no sense in the form it was left to us/me? What was the question and why quote my post in so doing?

 

Actually, my response was the same; what was the question for? Still not sure... In any event, your dryness is reminding me of Mark Levin (I think that's his name.)

Appreciate the wit. Lucy