Note the peaks right at or very soon after recessionary periods (shaded vertical lines in the chart). Also note it's peak during the 08 crisis. If it keeps rising. . .
Does that chart go down to 1:1 in the late 70's? I must have been asleep at the wheel. I don't remember that. Seems like an error to me. I have looked at other GSR charts and they never go to that level??????
Never mind. Looks like it is around 10 which makes more sense. A little misleading in my opinion to not start at 0. I also see the vertical axis is getting smaller at the top of the graph. Why does it do that?
Pricing sources for your gold and silver can dramatically alter the charts...and hence GSR. One could use London LBMA fixes (2X per day), NY Comex spot, etc. I've always preferred daily trading hours represented by a higher volume feed such as Net Dania. Using that, the June 2003 GSR peak was 81.94 (gold approx $370 and silver $4.50). In the 2008 crash the Net Dania daily trading hours peak was 83.78 in October 2008. GSR is at those same types of levels again mirroring financial market stresses.
This time around GSR looks somewhat similar to the 2000-2003 recessionary period where it went up from 38 to 81 during the stock market pull back. Silver was acting more like an industrial metal and reacted to the stock market decline with a shallow decline of its own. Gold went up 53% during that recession. Once inflationary forces kicked in again during 2003-2004 silver took off.
Fwiw GSR has built quite an impressive chart pattern over the past 7 years....a rather sharp "V" pattern. An even larger "V" or "U" goes back 13 years. If GSR takes out the last high of 83.78 (currently at 83.24) it could trigger this large pattern for a much stronger high. Next resistance lines come in around the 88-90 area. 88 would be left and right shoulder necklines formed over the past 17 years. The declining parallel channel since 1997 would project up to 90. If those 2 lines get crossed it's possible we could see 100+ again (ie 105). I'm just stating what the chart potentials are. With a typical trading range of 30-80, GSR doesn't often last for long outside that range. 17 and 100 were rarer extremes.
GSR significant bottoms occurred in 1998, 2006, 2008, 2011. Hard to make a cycle sense of that. In any case we're at the 5 year point now and have yet to even get to the peak first, before a sharp decline can commence. Worst case would suggest 10 years between major bottoms. Most of the major bottoms of the past 40 years fall into the 7-10.5 year range. So next major low due in 2018? GSR peaks occurred in 1996, 2003, and 2008. Those seem more cyclical with 5.5-7 years between them. The current cycle is at 7.3 years, or overdue. GSR is nearing the very top of a rising 4 year parallel channel (83-85). Another resistance point to navigate.
GSR has been in a volatile expansion pattern since around 1999. So things would seem to favor yet another higher high after the lower low in 2011. That could take it to the 88-90 target/resistance area. After that? Who knows? As long as markets remain in this deflationary/recessionary/commodities are struggling funk, gold will outperform silver (ie 2000-2003 again). Until the central banks pump in more liquidity, we could just gold do a 30-50% gain off the 2015 lows while silver sort of struggles.
Does that chart go down to 1:1 in the late 70's? I must have been asleep at the wheel. I don't remember that. Seems like an error to me. I have looked at other GSR charts and they never go to that level??????
Never mind. Looks like it is around 10 which makes more sense. A little misleading in my opinion to not start at 0. I also see the vertical axis is getting smaller at the top of the graph. Why does it do that?
It really isn't needed on a chart like this with a potential 0-100 y-axis range. Nonlinear axis scales do have many uses though.
If you are sitting on a pile of gold bullion and you intend to hold on to it for the long term (as some people do for 'insurance' reasons) then it is an absolute NO BRAINER at this time of the GSR to exchange ALL of it for silver.
Say you have 50 ounces of gold, this would then get you roughly 4000 ounces of silver (80 to 1).
However, exchanges only once never get you ahead.
The key is to exchange it at least twice (and more often if you can).
Let's say in 4 years from now the ratio drops to 44 to 1, then you take your 4000 oz of silver and exchange it back to gold and you get 91 ounces.
Holy Cow!.....You have increased your PM holdings by 41 ounces or by 82 %, regardless if the price drops, you still gain in ounces because this trade is solely controlled by a RATIO and not by PRICE.
So it can be utilized in both PM upswings and downturns in price.
Try it, you'll like it.
"Gold is money, and nothing else" (JP Morgan, 1912)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
While film photography's demand for silver has obviously decreased, with the exception of 2009, the total demand for physical silver has constantly increased since at least 2005. Appears demand been more than replaced.
And about all that silver that was not recovered and was forever lost to photography. Was it not removed from the world supply?
From what I read in an article many Moons ago, during the Great Depression gold continued to go up in price, while silver went down.
That general concept is true. Gold was actually fixed in price in the US and in most world markets from 1929-1933. During that period silver actually did decline in price, down to around 28c per ounce as I recall. During recessions and depressions silver tends to get hammered more than gold. In this case, gold was steady while silver declined. Gold got a quick one time adjustment in early 1934 when it was revalued via the US Gold Reserve Act from $20.67/oz to $35.00.
I don't consider swapping to silver as a no brainer right now until the GSR chart breaks back downward through support and proves it's not headed to 100....which is quite possible. If the markets are currently in a 2000-2003 period, gold could out-perform silver for another couple of years. During times of currency stress and financial crisis, gold out-performs silver. Does anyone have a memo from the FED and other Central Banks on when this deflationary period officially ends, and inflation is back-stopped by the PTB? It's possible though that the turn has already started.
What bothers me a bit about silver is that it had a typical 18+ year run up from 1962-1980 in line with a commodity bull market. That was followed by a 13 yr correction. Then another 18 year run up from 1993-2011. And now 5 yrs into the current correction. Gold was not allowed to bottom for good in 1993 like silver as the strong dollar policy/gold carry trade was underway through much of the 1990's. Gold didn't bottom from the 1980 high until 1999 (LTCM failure, Asian currency crisis, and Brown's Bottom). The "apparent" different cycle lengths in gold and silver does toss some questions into the equation. Formal interventions do skew the cycles. Silver had Warren Buffet as a guiding angel from the mid-1990's to 2006. It wasn't as likely to make a lower bottom when Buffet was buying 130 MILL ounces of it. He was a viable under-bidder for the market.
Originally posted by: tneig I sort of get the ratio concept, in that silver may be better now, but not the 'opposite end' for me and how it would benefit me in my circumstances.
ratio is a good indicator of telling us which of the two is the better buy compared to the other. It's screaming that silver is the better buy. Keep in mind that it is not an indicator of whether to buy precious metals or not, it only points us in the right direction when we do buy PMs.
Silver is more influenced by inflation/deflation than is gold. While both metals responded positively to QE, silver's reaction was more drastic as was its response to the end of QE.
The past highs in both metals were the result of two things, initially the loss of confidence in the financial system post-2008 followed by the fear of inflation from the massive creation of new money with QE1 and 2.
The failure of inflation to transpire (the money never reached the consumer, it only got as far as the investor/speculator) resulted in a rapid decline in prices over the last couple of years. As PMs respond positively to inflation (and fear of inflation) they drop like a rock in the face of deflation.
I would love to see a ten year chart that shows GSR numbers on the left side and gold and silver price percentage price change on the right side with periods of QE annotated. Such a chart would be very revealing. I challenge our chart masters to put one together.
I would venture to say that one of two things are required before PMs see new highs: (1) Drastic increase in the loss of confidence in the financial system and it's leaders (2) Return of increases in the money supply (more likely this time to reach consumer spending resulting in price inflation).
I don't see confidence improving and I do expect the FED to dust off the QE tool box. In order to get the rise in inflation that the FED desires, it will have to fly the helicopter over residential areas and not over Wall St. Unfortunately their next planned step, NIRP, will not force the consumer spending they desire. It will prove to be another mistake as it fuels hoarding of cash and blowing of new bubbles in selected asset markets with PMs a possible benefactor. The very recent rise in gold may have been just initial reaction to the reality of NIRP. If so, look for this rise to subside in the short term.
I would venture to say that one of two things are required before PMs see new highs:
(1) Drastic increase in the loss of confidence in the financial system and it's leaders
(2) Return of increases in the money supply (more likely this time to reach consumer spending resulting in price inflation).
(1) That's been in vogue since the middle of 2015. Things have picked up in the past 2-3 months.
(2) The money supply increases have never left, and likely never will. FED's M2 money supply is up +40% over the past 5 years ($8.9 to 12.6 TRILL).....a very steady increase over that time. Most of that increase going to the stock and bond markets, central bank assets/debt, etc.
That's about right. Today, I traded the equivalent of 40 Silver Eagles (retail), for a 1913 $10 Gold Indian in NGC MS 61 (wholesale), using this methodology. Give or take a couple ounces.
Smittys
Posts: 9,876 ✭✭✭✭✭
Comments
Worry is the interest you pay on a debt you may not owe.
Yes. Gold is overpriced compared to silver in my opinion. Anyone know what the highest GSR ever was? I'm just curious.
83 to 1 is the highest it has been in at least 10 years.
Give Me Liberty or Give Me Debt
Go Silver!
Or, as the lone ranger would say---"Hi yo silver! Away!"
Worry is the interest you pay on a debt you may not owe.
OK, but -- do we think gold should be cheaper, silver more expensive, or both?
Maybe they should be where they are and 80+ is the new normal.
I'd like to think silver is low and headed for $20 this year. It sure ain't much of a stretch.
OK, but -- do we think gold should be cheaper, silver more expensive, or both?
Maybe they should be where they are and 80+ is the new normal.
I'd like to think silver is low and headed for $20 this year. It sure ain't much of a stretch.
I suspect your guess may turn out to be right on the money...we shall see.
One more than the other.
Next big PM rally should bring GSR down.
Give Me Liberty or Give Me Debt
Never mind. Looks like it is around 10 which makes more sense. A little misleading in my opinion to not start at 0. I also see the vertical axis is getting smaller at the top of the graph. Why does it do that?
This time around GSR looks somewhat similar to the 2000-2003 recessionary period where it went up from 38 to 81 during the stock market pull back. Silver was acting more like an industrial metal and reacted to the stock market decline with a shallow decline of its own. Gold went up 53% during that recession. Once inflationary forces kicked in again during 2003-2004 silver took off.
Fwiw GSR has built quite an impressive chart pattern over the past 7 years....a rather sharp "V" pattern. An even larger "V" or "U" goes back 13 years. If GSR takes out the last high of 83.78 (currently at 83.24) it could trigger this large pattern for a much stronger high. Next resistance lines come in around the 88-90 area. 88 would be left and right shoulder necklines formed over the past 17 years. The declining parallel channel since 1997 would project up to 90. If those 2 lines get crossed it's possible we could see 100+ again (ie 105). I'm just stating what the chart potentials are. With a typical trading range of 30-80, GSR doesn't often last for long outside that range. 17 and 100 were rarer extremes.
10-30 year GSR charts
GSR significant bottoms occurred in 1998, 2006, 2008, 2011. Hard to make a cycle sense of that. In any case we're at the 5 year point now and have yet to even get to the peak first, before a sharp decline can commence. Worst case would suggest 10 years between major bottoms. Most of the major bottoms of the past 40 years fall into the 7-10.5 year range. So next major low due in 2018? GSR peaks occurred in 1996, 2003, and 2008. Those seem more cyclical with 5.5-7 years between them. The current cycle is at 7.3 years, or overdue. GSR is nearing the very top of a rising 4 year parallel channel (83-85). Another resistance point to navigate.
GSR has been in a volatile expansion pattern since around 1999. So things would seem to favor yet another higher high after the lower low in 2011. That could take it to the 88-90 target/resistance area. After that? Who knows? As long as markets remain in this deflationary/recessionary/commodities are struggling funk, gold will outperform silver (ie 2000-2003 again). Until the central banks pump in more liquidity, we could just gold do a 30-50% gain off the 2015 lows while silver sort of struggles.
Does that chart go down to 1:1 in the late 70's? I must have been asleep at the wheel. I don't remember that. Seems like an error to me. I have looked at other GSR charts and they never go to that level??????
Never mind. Looks like it is around 10 which makes more sense. A little misleading in my opinion to not start at 0. I also see the vertical axis is getting smaller at the top of the graph. Why does it do that?
It really isn't needed on a chart like this with a potential 0-100 y-axis range. Nonlinear axis scales do have many uses though.
Ratio was around 14 to 1 in Dec 1979.
Say you have 50 ounces of gold, this would then get you roughly 4000 ounces of silver (80 to 1).
However, exchanges only once never get you ahead.
The key is to exchange it at least twice (and more often if you can).
Let's say in 4 years from now the ratio drops to 44 to 1, then you take your 4000 oz of silver and exchange it back to gold and you get 91 ounces.
Holy Cow!.....You have increased your PM holdings by 41 ounces or by 82 %, regardless if the price drops, you still gain in ounces because this trade is solely controlled by a RATIO and not by PRICE.
So it can be utilized in both PM upswings and downturns in price.
Try it, you'll like it.
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
roll of film to CVS to be developed.
The film photographic process consumed a lot of silver, most of which never was recovered.
That business and its silver consumption has died. Nothing has replaced it.
And about all that silver that was not recovered and was forever lost to photography. Was it not removed from the world supply?
Give Me Liberty or Give Me Debt
Mine production up every year 2005-2014. 2014 is 37% higher than 2005.
The silver that was lost to photography was more than replaced by mine output.
Photo industry took 25% of mine output in 2005, that declined each subsequent year.
Silverware + Industrial Fabrication total is lower than 10 years prior.
Largest % growth is coins and bars. That component needs low confidence in
paper currency which is not much of a current factor.
paper currency which is not much of a current factor.
If there isn't low confidence in paper currency, why has there been growth in silver coins and bars? Don't forget that silver is a global commodity.
Worry is the interest you pay on a debt you may not owe.
OK, but -- do we think gold should be cheaper, silver more expensive, or both?
Appears silver got cheaper
Give Me Liberty or Give Me Debt
U.S. Type Set
From what I read in an article many Moons ago, during the Great Depression gold continued to go up in price, while silver went down.
That general concept is true. Gold was actually fixed in price in the US and in most world markets from 1929-1933. During that period silver actually did decline in price, down to around 28c per ounce as I recall. During recessions and depressions silver tends to get hammered more than gold. In this case, gold was steady while silver declined. Gold got a quick one time adjustment in early 1934 when it was revalued via the US Gold Reserve Act from $20.67/oz to $35.00.
I don't consider swapping to silver as a no brainer right now until the GSR chart breaks back downward through support and proves it's not headed to 100....which is quite possible. If the markets are currently in a 2000-2003 period, gold could out-perform silver for another couple of years. During times of currency stress and financial crisis, gold out-performs silver. Does anyone have a memo from the FED and other Central Banks on when this deflationary period officially ends, and inflation is back-stopped by the PTB? It's possible though that the turn has already started.
What bothers me a bit about silver is that it had a typical 18+ year run up from 1962-1980 in line with a commodity bull market. That was followed by a 13 yr correction. Then another 18 year run up from 1993-2011. And now 5 yrs into the current correction. Gold was not allowed to bottom for good in 1993 like silver as the strong dollar policy/gold carry trade was underway through much of the 1990's. Gold didn't bottom from the 1980 high until 1999 (LTCM failure, Asian currency crisis, and Brown's Bottom). The "apparent" different cycle lengths in gold and silver does toss some questions into the equation. Formal interventions do skew the cycles. Silver had Warren Buffet as a guiding angel from the mid-1990's to 2006. It wasn't as likely to make a lower bottom when Buffet was buying 130 MILL ounces of it. He was a viable under-bidder for the market.
I sort of get the ratio concept, in that silver may be better now, but not the 'opposite end' for me and how it would benefit me in my circumstances.
ratio is a good indicator of telling us which of the two is the better buy compared to the other. It's screaming that silver is the better buy. Keep in mind that it is not an indicator of whether to buy precious metals or not, it only points us in the right direction when we do buy PMs.
Silver is more influenced by inflation/deflation than is gold. While both metals responded positively to QE, silver's reaction was more drastic as was its response to the end of QE.
The past highs in both metals were the result of two things, initially the loss of confidence in the financial system post-2008 followed by the fear of inflation from the massive creation of new money with QE1 and 2.
The failure of inflation to transpire (the money never reached the consumer, it only got as far as the investor/speculator) resulted in a rapid decline in prices over the last couple of years. As PMs respond positively to inflation (and fear of inflation) they drop like a rock in the face of deflation.
I would love to see a ten year chart that shows GSR numbers on the left side and gold and silver price percentage price change on the right side with periods of QE annotated. Such a chart would be very revealing. I challenge our chart masters to put one together.
I would venture to say that one of two things are required before PMs see new highs:
(1) Drastic increase in the loss of confidence in the financial system and it's leaders
(2) Return of increases in the money supply (more likely this time to reach consumer spending resulting in price inflation).
I don't see confidence improving and I do expect the FED to dust off the QE tool box. In order to get the rise in inflation that the FED desires, it will have to fly the helicopter over residential areas and not over Wall St. Unfortunately their next planned step, NIRP, will not force the consumer spending they desire. It will prove to be another mistake as it fuels hoarding of cash and blowing of new bubbles in selected asset markets with PMs a possible benefactor. The very recent rise in gold may have been just initial reaction to the reality of NIRP. If so, look for this rise to subside in the short term.
Give Me Liberty or Give Me Debt
I would venture to say that one of two things are required before PMs see new highs:
(1) Drastic increase in the loss of confidence in the financial system and it's leaders
(2) Return of increases in the money supply (more likely this time to reach consumer spending resulting in price inflation).
(1) That's been in vogue since the middle of 2015. Things have picked up in the past 2-3 months.
(2) The money supply increases have never left, and likely never will. FED's M2 money supply is up +40% over the past 5 years ($8.9 to 12.6 TRILL).....a very steady increase over that time. Most of that increase going to the stock and bond markets, central bank assets/debt, etc.
FED M2 graph
Holy Cow!.....You have increased your PM holdings by 41 ounces or by 82 %
How many times in the past 30 or 40 years has the gold:silver ratio been 44 or less?
If one were to draw a best-fit regression line though the data chart VanHalen posted, what would be the direction?
Though if your target were 55 or something, it just might work out every once in a while...
Liberty: Parent of Science & Industry