Silver v's Gold

ProofRainbowRoosevelt · October 3, 2008 6:17PM

What is more overpriced right now (as of 10/4/08). Silver (11.16/oz) or Gold (834.80/oz)? I'm just a novice trying to learn. What do you think?

ttown · October 3, 2008 8:21PM

I say both are a good buy right now. If you can get silver anywhere near spot it's a steal but from what I've seen physical metal isn't going for that just the paper.

DoubleEagle59 · October 3, 2008 8:35PM

Presently, silver is a better buy than gold right now (in my opinion).

The current gold to silver ratio is 1:75. That is, the cost of one ounce of gold could also buy you 75 ounces of silver.

Quite recently, the ratio was as low as 1:45.

Basically, when the ratio is low, you should buy gold. When the ratio is high, buy silver.

Either way, it doesn't matter much as both metals are priced very low right now.

One piece of advice, buy physical metal, not the paper kind.

BlackBeard · October 3, 2008 11:29PM

I agree with all of the above. I think both have upside potentual in the near future. Of the two, silver is probably more underpriced as the historical ratio is usually much closer.

roadrunner · October 4, 2008 12:03AM

While the gold to silver ration of 75-1 is the highest it has been in probably decades it is not indicative of what you can buy real portable silver for. That ratio is only among silver and gold paper products (ie futures' contracts and ETF shares). If you want to lug around 100 oz bars of gold and 1000 bars of silver then you can take advantage of that 75-1 ratio. It just isn't feasible for 99% of most Americans.

At the moment silver is a better buy imo but be prepared to wait longer for it to show that. It could be years. The average Joe can afford to buy silver in small quantities, but not the case for gold as a rule. If the common guy starts looking for a place to park his declining fiat dollars, he will probably choose silver over gold. At least he has done so in the only other flight to metals (1970's) since we've been a pure fiat economy. It is hard to find a trend of the past 100 years when we only have 1 usable data point prior to today.

roadrunner

mkman123 · October 4, 2008 12:26AM

both are at a great price especially silver. maybe get a little of both if you have the money.

illini420 · October 4, 2008 4:46AM

<< both are at a great price especially silver. maybe get a little of both if you have the money. >>

Agreed. Both are great at melt prices if you can get them at those prices. I've been selling off a little gold to buy more junk silver lately. Still think both are great, but I just have too much gold if there's such a thing...

BBN · October 4, 2008 5:19AM

If silver is about $11/ounce how in the world are the basic rounds going for $15 on ebay? What am I missing?

BlackBeard · October 4, 2008 5:27AM

<< If silver is about $11/ounce how in the world are the basic rounds going for $15 on ebay? What am I missing? >>

It appears to be a disconnect in the melt value and actual trading range. Some argue there is no disconnect as you can buy 1,000oz bars close to melt but that's not what 95% of the buying public are after.

illini420 · October 4, 2008 5:30AM

<< If silver is about $11/ounce how in the world are the basic rounds going for $15 on ebay? What am I missing? >>

Well for lots in the $250-$750 range the current 30% cashback promo has something to do with it for sure...

mkman123 · October 4, 2008 5:46AM

use the MSN live rebate and you can get good deals.

Also check online like teletrade. If you are a new member, they send you a coupon. Using the coupon to buy 12 oz of silver comes to like 11/oz

coynclecter · October 4, 2008 6:08AM

if silver is about $11/ounce how in the world are the basic rounds going for $15 on ebay? What am I missing?

Your missing the manipulation. The COMEX price is manipulated to keep the crisis under control. 2 banks, subsidized by the FED hold hundreds of millions of "paper" ounces short they put in place in the last 2 months to "crash" the price. This won't last long, if they can't get the public to stop buying they will deplete the COMEX supply and they will declare "force majeur" due to the crisis and default.

The holders and buyers of bullion obviously believe this to be a real possibility. Others are ordering "in advance" and hoping they don't get a "sorry charlie" at delivery time. Or worse, try to get your money back if the company goes BK without delivering.

fc · October 4, 2008 7:12AM

as far back as i remember i could never get silver for spot.. the actual
spot price.

everytime i went to a B&M there would be a premium on silver. For
example a 10 ounce engelhard bar would have a premium of 1 dollar
per ounce and up depending on the owner.

ASEs had an even higher premium. 90% had the lowest.

Now that silver has dropped people are fighting over it and sellers
know this. Thus premiums go up right now.

That same engelhard bar.. with silver at 11, you are lucky to get it
for 13.50 an ounce. 15 would probably secure it but I notice even
higher prices are being paid on ebay.

If silver goes up to 15.. the spread will shrink in my opinion.
If silver goes down some more, the spread will increase.

More buyers then sellers at the moment.

BBN · October 4, 2008 8:08AM

Yeah, I've noticed if a person just wants to buy some in bulk the best way to getit near spot is on ebay. Even then is selling above spot

Overdate · October 4, 2008 10:37AM

At current prices, I think platinum and palladium are better buys than gold or silver.

HonoluluDude · October 4, 2008 12:44PM

Neither gold nor silver is overpriced because physical supply is drying up. Dollars are still overpriced though-- they just printed 700 billion more of 'em this week to make sure there is no shortage.

SpaceMonkey · October 4, 2008 12:49PM

<< It is hard to find a trend of the past 100 years when we only have 1 usable data point prior to today.

roadrunner >>

a very wise statement

-sm

Deadhorse · October 4, 2008 1:00PM

<< Some argue there is no disconnect as you can buy 1,000oz bars close to melt ...... >>

Not anymore, you can't.

There is a premium there as well, that is, if you can locate them for immediate delivery.

HonoluluDude · October 4, 2008 1:05PM

<< 

<< Some argue there is no disconnect as you can buy 1,000oz bars close to melt ...... >>

Not anymore, you can't. There is a premium there as well, that is, if you can locate them for immediate delivery. >>

Word has it that the COMEX won't allow traders to take physical delivery.

Deadhorse · October 4, 2008 1:20PM

<< 

<< 

<< Some argue there is no disconnect as you can buy 1,000oz bars close to melt ...... >>

Not anymore, you can't.

There is a premium there as well, that is, if you can locate them for immediate delivery. >>

Word has it that the COMEX won't allow traders to take physical delivery. >>

I'm not sold on the COMEX's financial stability. AFAIK, your "word" is correct.

There are other wholesalers, many of them.

MoneyLA · October 4, 2008 11:37PM

this is an interesting discussion.

normally, I would go with the gold to silver price ratio, and at 75 to 1 I would normally say silver is the better buy.

but in the last two years the ratio has meant nothing, and gold investors were rewarded more than silver investors.

today, in this overheated market, I would look at the "premium markup" and perhaps considere buying the metal with the smaller percentage premium.

for example, silver is about $11 an ounce, but a round is selling for about $17 an ounce. thats a premium markup of about fifty percent.

gold is about $835 an ounce, but with the premium is selling for $895 an ounce or a premium of about ten percent.

that tells me gold is the better buy right now, because premiums are artificial and can collapse before the base price of the metal.

I do not track other markets such as platinum, but if platinum has a smaller premium than gold then I would suggest platinum is the better buy.

but this theory of mine is for "instant pricing." it does not take into consideration other variables. for example, platinum has a problem if the economy slows and car sales continue sluggish or drop.

silver is also an industrial metal while gold is mroe emotional and will rise in a crisis more than silver.

these other factors must also be taken into consideration.

for several years I said on TV and on the web that silver was the better buy, but in the last couple of months gold proved to be better.

roadrunner · October 4, 2008 11:47PM

If you go by the actual prices of 1 oz gold and 1 oz silver rounds/bars both have seen a fall of about 20% on actual transaction prices since the March cave-in. I'd say both have performed about equally bad.

Neither gold nor silver is overpriced because physical supply is drying up. Dollars are still overpriced though-- they just printed 700 billion more of 'em this week to make sure there is no shortage.

Agree. To counter the risks in the economy gold should be at $1200-$1500 right now, and silver at $25-$35.

With the $150B in pork added to the Relief Bill, it's now $850B. But it will take a while to spend that amount. The FED has dumped over $1 TRILL in liquidity (off the books) in the past few weeks. That is the real bailout plan....bypass Congress altogether. They spent much of that money before the bill was even drafted. I would agree that dollars are overpriced but markets can go the wrong way longer than we think. With the Euro mortgage lenders now under fire, a large EU rate cut next week could give the dollar more artificial strength.

roadrunner

Silver v's Gold

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