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Fun with the Gold-Silver Ratio
DoubleEagle59
Posts: 8,200 ✭✭✭✭✭
For someone who Holds PM for the long haul, I have always suggested trading the Gold-Silver Ratio to accumulate ounces.
Personally, I've done this once or twice (on a small scale) but look at the following chart and let's have some 'fun' by imagining the following scenario.
Look at the 3 peaks and 3 bottoms from the following chart. These indicate the time of swapping gold for silver and visa versa.
Do you know if you starting swapping gold for silver in 1991 and followed this up with 5 more swaps (at the perfect time of course), you could have increased your inventory of Ounces by a factor of almost 9!!!!
Follow this..... and let's assume that ' big shot PM collector ' starts with 100 ounces of GOLD.
Trade 1: 1991, Swap 100 oz of gold at ratio of 100:1 to yield 10,000 Silver
Trade 2: 1998, swap these 10,000 Silver at ratio 40:1 to yield 250 oz of Gold
Trade 3: 2003, swap these 250 oz Gold to yield 20,000 oz Silver (at ratio 80:1)
Ttrade 4: 2007, swap these 20,000 oz silver (ratio 45:1) to yield 444 oz Gold
Trade 5: 2009, swap these 444 oz Gold to yield (ratio 82:1) 36,444 oz Silver.
Trade 6: 2011, (today) swap these 36,444 oz Silver to yield (ratio 42:1) 867 oz of Gold.
There you have it, regardless of PRICE movement, you have increased your ounces from 100 oz of Gold to 867 oz .
AND...most importantly, if Big Shot pmguy didn't swap, he'd still have 100 oz and a present day value of $140,000.00
BUT, if he had swapped, he'd be sitting on a pile of Franklins, Grants and Washingtons worth $1,213,800.00
Personally, I've done this once or twice (on a small scale) but look at the following chart and let's have some 'fun' by imagining the following scenario.
Look at the 3 peaks and 3 bottoms from the following chart. These indicate the time of swapping gold for silver and visa versa.
Do you know if you starting swapping gold for silver in 1991 and followed this up with 5 more swaps (at the perfect time of course), you could have increased your inventory of Ounces by a factor of almost 9!!!!
Follow this..... and let's assume that ' big shot PM collector ' starts with 100 ounces of GOLD.
Trade 1: 1991, Swap 100 oz of gold at ratio of 100:1 to yield 10,000 Silver
Trade 2: 1998, swap these 10,000 Silver at ratio 40:1 to yield 250 oz of Gold
Trade 3: 2003, swap these 250 oz Gold to yield 20,000 oz Silver (at ratio 80:1)
Ttrade 4: 2007, swap these 20,000 oz silver (ratio 45:1) to yield 444 oz Gold
Trade 5: 2009, swap these 444 oz Gold to yield (ratio 82:1) 36,444 oz Silver.
Trade 6: 2011, (today) swap these 36,444 oz Silver to yield (ratio 42:1) 867 oz of Gold.
There you have it, regardless of PRICE movement, you have increased your ounces from 100 oz of Gold to 867 oz .
AND...most importantly, if Big Shot pmguy didn't swap, he'd still have 100 oz and a present day value of $140,000.00
BUT, if he had swapped, he'd be sitting on a pile of Franklins, Grants and Washingtons worth $1,213,800.00
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
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Comments
<< <i>you are not accounting for taxes (not that I would either) >>
Even figuring for taxes you're making quite a haul.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
<< <i>swaps (at the perfect time of course) >>
If it only worked that way we'd all be rich. Since it doesn't you trade each of the two markets based on their own merit and not their price relationship to each other.
Give Me Liberty or Give Me Debt