Why is Silver lagging behind Gold?

CoinMaster1229 · October 16, 2007 4:19PM

Silver was over $14.00 per oz. when gold was $600.00 last year?

tightbudget · October 16, 2007 4:37PM

Everybody loves gold. Wouldn't you rather have a gold necklace rather than a silver one?

SpaceMonkey · October 16, 2007 4:39PM

that just means it's time to buy more silver

/ed

Myqqy · October 16, 2007 4:47PM

I like silver more, because it fits better in my budget.

But I still like the value of silver, and am picking up some each month...

BIGJAYVEE · October 16, 2007 8:05PM

<< I like silver more, because it fits better in my budget.

But I still like the value of silver, and am picking up some each month... >>

Sounds like a good idea.What's a good buying price these days for Silver Dollars in bulk?Had a chance to buy a bag with mixed Morgans,Peace and 1921 Morgans,about 600pcs.

DoubleEagle59 · October 16, 2007 8:54PM

Trade the ratio!!

Right now, trade all your gold for silver, then when the ratio goes back to 45:1, trade that silver all back into gold.

Regardless if the prices go up or down, if you trade the ratios, you will increase your gold holdings by 20%.

Example: Let's say you had 50 ounces of gold. Today if you traded this for silver, you would get approx. 2750 ounces in silver. Then, when the ratio goes to 45:1, you trade this amount of silver back to gold and get 61 ounces for gold. An increase of 20%.

I've been doing this off and on for ten years and it's worked out well. True, it's impossible to buy and sell at the peaks, but if you're patient, you can still increase your holdings.

Overall, it's a fantastic strategy if you're in it for the long haul. I wouldn't recommend it if you're looking to make a profit in a short time span (6 months to 1 year).

Cladiator · October 16, 2007 8:57PM

<< Trade the ratio!!

Right now, trade all your gold for silver, then when the ratio goes back to 45:1, trade that silver all back into gold.

Regardless if the prices go up or down, if you trade the ratios, you will increase your gold holdings by 20%.

Example: Let's say you had 50 ounces of gold. Today if you traded this for silver, you would get approx. 2750 ounces in silver. Then, when the ratio goes to 45:1, you trade this amount of silver back to gold and get 61 ounces for gold. An increase of 20%.

I've been doing this off and on for over ten years and it's worked out well. True, it's impossible to buy and sell at the peaks, but if you're patient, you can still increase your holdings.

Overall, it's a fantastic strategy if you're in it for the long haul. I wouldn't recommend it if you're looking to make a profit in a short time span (6 months to 1 year). >>

Interesting strategy. What's the ratio at currently?

Steve27 · October 16, 2007 9:04PM

"Why is silver lagging behind Gold?"

I've been wondering about that too, and I haven't a clue.

" Everybody loves gold. Wouldn't you rather have a gold necklace rather than a silver one? "

No, I prefer silver to gold, and I really like platinum.

DoubleEagle59 · October 16, 2007 9:05PM

I'm rounding off a little bit, but let's say gold today is at $760 US and silver is at $13.50 US.

Then the ratio is 760 divided by 13.50, this equals 56.3. This is the present day ratio of gold to silver.

Now 'coinmaster' started this thread with the figures of gold at $600 and silver at $14. At that time the ratio was 600 divided by 14, equals a ratio of 42.8.

Using these two ratios....if you had 50 ounces of gold, traded it to silver at the first ratio of 56.3:1, then retraded it back to gold again at 42.8 ratio, you would end up with 65.77 ounces of gold. Not bad, eh!!!!

holeinone1972 · October 16, 2007 9:15PM

<< Silver was over $14.00 per oz. when gold was $600.00 last year?

>>

It is obvious, there are a large number of Werewolves, choking down the price of silver. Thus by keeping silver less valuable, more and more werewolf hunters are turned off by the profit potential, intern keeping the werewolf community safer.

Sorry I am very bored.

AnkurJ · October 16, 2007 9:56PM

Ive been buying silver regularly along with gold.
AJ

bstat1020 · October 16, 2007 10:44PM

<< I'm rounding off a little bit, but let's say gold today is at $760 US and silver is at $13.50 US.

Then the ratio is 760 divided by 13.50, this equals 56.3. This is the present day ratio of gold to silver.

Now 'coinmaster' started this thread with the figures of gold at $600 and silver at $14. At that time the ratio was 600 divided by 14, equals a ratio of 42.8.

Using these two ratios....if you had 50 ounces of gold, traded it to silver at the first ratio of 56.3:1, then retraded it back to gold again at 42.8 ratio, you would end up with 65.77 ounces of gold. Not bad, eh!!!! >>

So are you actually trading gold for silver, or are you selling the gold off and then using that money to buy silver? Or vise versa.

Thanks, Bstat

DoubleEagle59 · October 16, 2007 10:56PM

I'm trading all gold for silver when the ratio is high.

Then, I'm trading all this silver back to gold when the ratio is low.

Then trading all the gold back to silver when the ratio is high again............ on and on for many years as the cycle repeats itself.

As I said before, if you're in it for the long haul (precious metal investment for at least 10 years) then this is an absolute MUST strategy. It will definitely increase your PM holdings, regardless of price fluctuations because it's solely dependent on the price RATIO between the two metals.

TwoSides2aCoin · October 16, 2007 11:00PM

The haunting of the Hunt brothers after trying to beat the system.

Texast · October 16, 2007 11:05PM

The highly anticipated silver exchange-traded fund caused much speculation and the pending launch had been pushing up silver prices, which early last year hit multi-decade highs. The ETF, which for the first time allowed individual investors to invest in silver without holding the metal or tapping futures markets, was speculated to bolster demand for the metal.

IrishMike · October 16, 2007 11:15PM

One of the obvious reasons and a warning at the same time is that gold is overpriced and due for a correction in the short term. Or you could interpret as silver is under priced according to the GSR. Flip a coin, eh.

RedTiger · October 17, 2007 12:14AM

The gold rally is primarily currency driven. As the dollar weakens, folks in other countries get gold for a lower price in their local currency. Folks in other countries like gold much more than silver. Silver has more industrial demand, though it has lagged some other industrial metals as well.

garsmith · October 17, 2007 12:15AM

<<Why is Silver lagging behind Gold?>>

Shhhhh, I'm buying! Keep it quite until I'm selling ok!!!

ttown · October 17, 2007 12:25AM

If we can get Russ to sell some silver it's sure to sky rocket.

Wade · October 17, 2007 1:35AM

<< Trade the ratio!!

Right now, trade all your gold for silver, then when the ratio goes back to 45:1, trade that silver all back into gold.

Regardless if the prices go up or down, if you trade the ratios, you will increase your gold holdings by 20%.

Example: Let's say you had 50 ounces of gold. Today if you traded this for silver, you would get approx. 2750 ounces in silver. Then, when the ratio goes to 45:1, you trade this amount of silver back to gold and get 61 ounces for gold. An increase of 20%.

I've been doing this off and on for ten years and it's worked out well. True, it's impossible to buy and sell at the peaks, but if you're patient, you can still increase your holdings.

Overall, it's a fantastic strategy if you're in it for the long haul. I wouldn't recommend it if you're looking to make a profit in a short time span (6 months to 1 year). >>

In your opinion what constitues a high enough ratio to convert gold to silver? 49:1? 52:1? Or do you just keep a close eye and look for a peak and trade when silver starts to make a push?

Just curious, I've always wondered about trading the ratio but have never done it.
TIA!
-Wade

ziggy29 · October 17, 2007 1:41AM

Gold is "sexier." Gold is more portable. People who want to ride the precious metals wave tend to think "gold" before everything else.

Yet from a fundamentals standpoint and the standpoint of historical price levels, silver is WAY undervalued relative to gold, IMO. It's what, close to a 60-to-1 ratio now?

ricko · October 17, 2007 2:32AM

Be patient..... Cheers, RickO

DoubleEagle59 · October 17, 2007 8:47AM

I consider a high ratio at least 55;1.

At this ratio, to trade back, the ratio has to drop to at least 47:1

jmski52 · October 17, 2007 9:01AM

I thought that the historical ratio was 16:1. When did that change? If there was ever any validity to the 16:1, then silver is significantly underpriced right now.

7over8 · October 17, 2007 9:55AM

Absolutely!!!

Silver should be crossing $20 by now.

Konahead · October 17, 2007 5:24PM

it will catch up it always does. Buy low

tychojoe · January 2, 2008 5:22AM

Does anybody have a more recent gold-to-silver ratio chart than this one? For the last 12 months, say?

BECOKA · January 2, 2008 5:26AM

There is much more silver than gold. Supply and demand.

cladking · January 2, 2008 6:15AM

<< There is much more silver than gold. >>

This probably isn't true.

If it is true you'd have a very difficult time finding even smaller quantities of silver
while the gold can be found in vast quantities in warehouses all over he world. Sil-
ver has been steadily consumed at a much higher rate than it's produced while gold
increases in supply every day.

It's more inertia that explains the relative prices of gold and silver.

Recently gold has been moving up because the market fears monetary instability
and recession. Silver would do poorly in a recession probably so won't move up if
people expect lower prices for commodities. Silver also is less a monetary metal
than is gold so it won't move up on fear either.

Once the market comes to believe that a recession isn't in the offing the ratio will
probably begin decreasing again.

Deadhorse · January 2, 2008 7:37AM

<< There is much more silver than gold. Supply and demand. >>

With all due respect, that isn't exactly correct.

Psychology plays a larger role in regular folk's minds that the reality, it's not really supply and demand.

If that were true, silver would be sky high as there is much more demand for silver in industry than there is in gold for investment or jewelry.

Just the fact that it is nearly impossible to pin down those numbers tells me that those in control don't really want the masses to know the truth about how much of each actually exists.

You can find lots of speculation and a general idea of the amount of gold in the world.

Just try to do that same research with silver.

Bullish · January 2, 2008 7:41AM

<< that just means it's time to buy more silver

/ed >>

Buy all you can!! Things can change in a minute flat!!

roadrunner · January 2, 2008 7:49AM

Considering that all the gold ever mined can sit on a cube the size of a tennis court.........and when spread all around the world...
that's not a vast quantity imo.

The value of all the gold ever mined in history trades on the forex daily. Again, not a vast quantity imo.

roadrunner

WinPitcher · January 2, 2008 7:51AM

I always thought the traditional ratio was 20 - 1. A 20.00 gold pc was an OZ as was a silver dollar.

And if that is the case then silver would be around 40.00 per oz. I think that was only the case when our economy was based on precious metals.

Maybe someone here who knows more could clarify this?

Steve

stockwiz · January 2, 2008 7:56AM

here are some interesting charts to ponder

LINK

LINK

Silver has been consumed in greater quantity then it's been mined for many years now, to the point where it's very likely that there might only be a 4 to 1 or less silver to gold ratio above ground right now.
Silver is, and always has been pretty much in the later half of the 1900's to today, been mined at about a 8 to 1 ratio with gold, going back for decades when comparing the two charts. (it was actually more like 12 to 1 in the early parts of the last century and before)

The amount of gold above ground for each person on the planet has remained pretty steady, while the amount of silver per person above ground has most definitely gone down... in the long run, I believe the value of silver will be found and the gold to silver ratio will narrow considerably.. I also believe that at least at current prices, silver will always be consumed in greater amounts then it's produced, because industry demand continues to increase quite rapidly.

2bucks · January 2, 2008 8:03AM

<< Trade the ratio!!

Right now, trade all your gold for silver, then when the ratio goes back to 45:1, trade that silver all back into gold.

Regardless if the prices go up or down, if you trade the ratios, you will increase your gold holdings by 20%.

Example: Let's say you had 50 ounces of gold. Today if you traded this for silver, you would get approx. 2750 ounces in silver. Then, when the ratio goes to 45:1, you trade this amount of silver back to gold and get 61 ounces for gold. An increase of 20%.

I've been doing this off and on for ten years and it's worked out well. True, it's impossible to buy and sell at the peaks, but if you're patient, you can still increase your holdings.

Overall, it's a fantastic strategy if you're in it for the long haul. I wouldn't recommend it if you're looking to make a profit in a short time span (6 months to 1 year). >>

So where would you store 171.875 lbs. of silver vs. 3.125 lbs of gold? I can just imagine in being delivered by my postman...

and even more funny would be me taking it to the SDB(s).

This is basically currency trading. You can make a lot more on the ratio between the dollar and the euro.

Deadhorse · January 2, 2008 8:04AM

<< I always thought the traditional ratio was 20 - 1. A 20.00 gold pc was an OZ as was a silver dollar.

Steve >>

Traditional ratios don't mean much these days, but they may again in the not too distant future.

A $20 gold piece contained .9 ounces of gold, while a silver dollar contained .7736 ounces of silver, just for the record.

Deadhorse · January 2, 2008 8:14AM

<< So where would you store 171.875 lbs. of silver vs. 3.125 lbs of gold? I can just imagine in being delivered by my postman...

and even more funny would be me taking it to the SDB(s).

This is basically currency trading. You can make a lot more on the ratio between the dollar and the euro. >>

Don't be silly!

171 pounds of silver is nothing in volume, around 26 100 ounce bars. That's a lot like 26 VCR tapes in volume. Try storing 1700 pounds pounds of it. Even that isn't all that difficult.

Currency trading? Uh, sure, go ahead. A huge paper trail and good chance of losing your shirt.

Hindsight has 20-20 vision. How many actually went to the trouble of trading all their FRNs for Euros back when the Euro first came out and then chose to sit on it for years with no real gains?

The answer is, almost no one.

cladking · January 2, 2008 8:38AM

<< here are some interesting charts to ponder

LINK

LINK

Silver has been consumed in greater quantity then it's been mined for many years now, to the point where it's very likely that there might only be a 4 to 1 or less silver to gold ratio above ground right now.
Silver is, and always has been pretty much in the later half of the 1900's to today, been mined at about a 8 to 1 ratio with gold, going back for decades when comparing the two charts. (it was actually more like 12 to 1 in the early parts of the last century and before)

The amount of gold above ground for each person on the planet has remained pretty steady, while the amount of silver per person above ground has most definitely gone down... in the long run, I believe the value of silver will be found and the gold to silver ratio will narrow considerably.. I also believe that at least at current prices, silver will always be consumed in greater amounts then it's produced, because industry demand continues to increase quite rapidly. >>

Great links.

Here's another that might be even more telling. It's a PDF.

While it's not defined note the "apparent consumption" column. This looks
like the start of a parabolic increase and there will need to be a structural
change in the way silver is mined to keep abreast of it.

Most of the silver above ground is in the form of coin and we do have a fairly
good handle on the amount of it surviving. The implication is that silver will
soon enough be scarcer than gold if not already.

edited to add; Apparent consumption is defined as the total amount consumed by industry plus coinage.

PerryHall · January 2, 2008 8:42AM

<< A $20 gold piece contained .9 ounces of gold, while a silver dollar contained .7736 ounces of silver, just for the record. >>

A double eagle weighs .9675 Troy ounces.

Deadhorse · January 2, 2008 8:46AM

<< 

<< A $20 gold piece contained .9 ounces of gold, while a silver dollar contained .7736 ounces of silver, just for the record. >>

A double eagle weighs .9675 Troy ounces. >>

My bad! Typing faster than thinking. I was translating 90% incorrectly.

Thanks.

StampAlarm · January 2, 2008 8:52AM

Silver is a bum investment because of the VAT placed on it in the EU. It's hamstrung! There's nothing
else that can be said about it.

Would you invest in silver or gold if there was a VAT of 17.5% in place
on silver bullion?

Jerry

ARCO · January 2, 2008 8:56AM

Having schlepped over 10 thousand ounces of silver from storage unit to car, to basement, to dealer to sell (for a relative), I can tell you that it is ****ing heavy! It doesn't take too much room, but you have to go put on one of those weightlifter belts, load up on protein shakes and you will probably find yourself subscribing to "Muscle and Fitness" magazine when done to join the ranks of other accomplished body builders.

Given the supposed minimal above ground stores of silver in existance, you would think that there might be a supply pinch that would drive up the prices. Who knows?

Tyler

airedale · January 2, 2008 9:02AM

I brought it up last week and still Kitco is currently out of stock on American Silver Eagles and Canadian Silver Maples ????

FLBuffaloHunter · January 2, 2008 9:11AM

The bullion 2008 ASE's were not released until today by the Mint. They should be back in stock soon.

fastrudy · January 2, 2008 9:30AM

Silver is a bum investment because of the VAT placed on it in the EU. It's hamstrung! There's nothing
else that can be said about it.

Would you invest in silver or gold if there was a VAT of 17.5% in place
on silver bullion?

I agree, the entire EU is turned off to Silver. Trading the ratios is a good strategy. Historical ratios and traditional ratios are archaic in a modern world. They may be a bi**h to compute, but they are still meaningless, except to the economists, who can't predict ANYTHING to certainty. Google "The trillion dolar bet". It was a NOVA program about a Nobel prize winning economist who thought he had a 'sure thing'. He should have kept the Nobel prize money and retired.

Deadhorse · January 2, 2008 9:32AM

<< Silver is a bum investment because of the VAT placed on it in the EU. It's hamstrung! There's nothing
else that can be said about it.

Would you invest in silver or gold if there was a VAT of 17.5% in place
on silver bullion?

Jerry >>

Just leaves more for us and the Chinese. VATs aren't forever, particularly when they unfairly restrict business growth. I'll bet it's gone in a year.

BTW, silver is a GREAT investment!

fastrudy · January 2, 2008 9:38AM

VATs aren't forever, particularly when they unfairly restrict business growth. I'll bet it's gone in a year.

EU has been around since 1957. New members are required to have a VAT for admission, so I respectfully disagree with the above statement.

nickel · January 2, 2008 9:44AM

There doesn't seem to be a consistency in the gold/silver ratio .
Maybe there was decades ago , when the world was less volatile .
Is a ratio necessary or usefull anymore ?
Actually , why would one metal affect the other in value ?
(My new years rant brought about by beer and a loss by
the home team in the meineke bowl)

cladking · January 2, 2008 10:06AM

<< Silver is a bum investment because of the VAT placed on it in the EU. It's hamstrung! There's nothing
else that can be said about it.

Would you invest in silver or gold if there was a VAT of 17.5% in place
on silver bullion?

Jerry >>

Europeans must be spending money on something or they wouldn't even have a VAT.

They are spending money on items that contain silver too. Their factories are using it
up just as fast as factories everywhere. It doesn't really matter who does or does not
buy silver or their reasons. All that matters is aggregate supply and demand.

They also collect coins containing silver which reduces quantities available to smelters.

ProofCollection · January 2, 2008 2:01PM

The metals bubble is just starting to grow. We will soon reach a time when it will be the topic of conversation everywhere, just like tech stocks or real estate were a few years ago.

Once that happens and gold gets even higher, silver will start to become popular as a "cheap alternative" to gold.

Deadhorse · January 2, 2008 2:18PM

<< VATs aren't forever, particularly when they unfairly restrict business growth. I'll bet it's gone in a year.

EU has been around since 1957. New members are required to have a VAT for admission, so I respectfully disagree with the above statement. >>

You could well be correct. Time will tell.

Still, I think this particular VAT is a hindrance and will soon be gone because of that.

They are only hurting themselves with this one. Smoebody over there must have brain cell or two thinking about this issue.

Why is Silver lagging behind Gold?

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