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<p>[QUOTE=&quot;Rono, post: 1077444, member: 6492&quot;]Howdy folks,</p><p>&nbsp;</p><p>Just read the thread and was most intrigued.&nbsp; I&#039;ve been playing the metals via investments and bullion for 20 years.&nbsp; I once owned SLSLX a long defunct silver mutual fund.&nbsp; Didn&#039;t make any money but that was before the present bull market that started in 2001/2.&nbsp; </p><p>Everything I&#039;ve ever read has the g/s ratio at between 15 and 20 to 1;&nbsp; and other than recent times for most of known history.&nbsp; Granted, much was by govt fiat with exchange rates and all, but it was also a market driven metric.&nbsp; </p><p>&nbsp;</p><p>Today the markets are very different.&nbsp; As you mentioned, gold and silver are neither officially a currency of any country so you&#039;ve got market forces driving the ratio.&nbsp; You&#039;ve also got two very different metals (and markets) with gold more a store of value and silver more an industrial metal.&nbsp; Very different demand curves and profiles.&nbsp; India was mentioned where it&#039;s a cultural thing.&nbsp; It&#039;s the womens social security, if you will and all gift giving revolves around gold.&nbsp; The chinese have long loved silver as a store of value, but were also banned from owning gold until recently and the pent up demand . . . .&nbsp; Oh, and throw in all of Chindia&#039;s nouveau riche buying bling.</p><p>&nbsp;</p><p>As for the gold/silver ratio, it matters because people think it matters and behave accordingly.&nbsp;&nbsp; I use it as a guide to fine tune my pm investments.&nbsp; Currently, I&#039;m trying to add silver miners relative to silver bullion and silver relative to gold.&nbsp; &nbsp; The pure play would be to ratio your holdings of gold and silver to match the existing ratio.&nbsp;&nbsp; As it chanages, you rebalance.&nbsp; I was passing thru Ft Campbell last spring and stopped a coin store to window shop.&nbsp; Discussed this with the owner and he felt strongly you needed to be down at 50 to 1 at the time.&nbsp; I wasn&#039;t quite there, but it was a good year.&nbsp; ;-)</p><p>&nbsp;</p><p>I don&#039;t know how the bullion ETFs have impacted the market - the jury is still out.&nbsp; It&#039;s like the gold/xau ratio.&nbsp; Another long used metric of the balancing of mining stocks to bullion.&nbsp; We know that miners and bullion mirror each other over time.&nbsp; However, they can diverge greatly in the short run and the gold/xau ratio is a measure of that divergence.&nbsp; It&#039;s been waaaaayyy high - 7&#039;s and 8&#039;s when the equilibrium point has always been 4.0.&nbsp; Under that you sell stocks and buy bullion. Over 5 and you sell bullion and buy stocks.&nbsp; Ah, but I really thing the bullion ETF&#039;s like GLD have screwed this up and have moved the break point higher.&nbsp; feh.&nbsp; I know it means you should be long mining stocks relative to bullion.&nbsp; </p><p>&nbsp;</p><p>And keep in mind, please that all of this is on the margin and simply fine tuning some investments.&nbsp; </p><p>&nbsp;</p><p>peace,</p><p>&nbsp;</p><p>rono[/QUOTE]</p><p><br /></p>

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