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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 04/06/2008 : 20:22:35
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| There is a lot of evidence to support a future decoupling of the gold/silver ratio (in either direction). It isn't written in stone. |
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swusc
Penny Hoarding Member
USA
553 Posts |
 Posted - 04/06/2008 : 20:54:36
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There is also a gold to oil ratio. Usually 9 to 10 to one.
Then again, just because some ratio existed in the past doesn't mean it will be the same in the future.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Nickelless
Administrator
USA
5580 Posts |
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Saul Mine
Penny Collector Member
USA
343 Posts |
Posted - 04/06/2008 : 21:20:45
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quote:
Originally posted by texcattlerancher
*****
As for deciding whether to buy gold or silver, that is a simple number: the gold/silver ratio. Right now it is about 52. Last month it dipped to 48. As DOW drops, the GS ratio rises. Two years ago it went to 98. A low ratio means silver is expensive relative to gold. A high ratio means silver is cheap. So when the ratio goes down you sell your silver and buy gold. When the ratio goes up you sell your gold and buy silver. Example: you buy one ounce of gold now, equivalent to 52 ounces of silver. If the ratio goes to 104 you sell the gold and buy 104 ounces of silver and you have 52 ounces free. Then when the ratio goes back to 52 you sell your 104 ounces of silver and buy two ounces of gold. It is the safest possible investment plan because you are always invested in hard metal.
*****
Very interesting Saul. Are you doing this? And what are some good guidelines? Should we buy gold right now with the current ratio or should we buy silver? Also, how much change in the ratio do you look for before you change one metal for the other? Is this investment strategy written anywhere so that I can go read more about it?
I have been doing this for years. It is a simple matter of "buy low, sell high" except you count the price in silver instead of dollars. If an ounce of gold costs 50 ounces of silver and you know it has been 70 or 80 recently, you buy gold. If it costs 100 ounces of silver, you buy silver.
Generally you have to pay a premium to buy, and if you have sterling you have to pay refining costs to sell, so you figure all that in before deciding what to buy or when to swap. You could do the same thing with junk silver coins, which are below spot right now. At times they go above spot, and then you sell them and buy rounds or gold.
I got this idea from Franklin Sanders at You must be logged in to see this link. and he has some sort of offer to make it easier. I haven't dealt with him. His daily commentary is at You must be logged in to see this link.. |
A penny sorted is a penny earned!
Please use tinyurl.com to post links. Long links make posts hard to read. |
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Saul Mine
Penny Collector Member
USA
343 Posts |
Posted - 04/06/2008 : 21:37:45
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quote:
Originally posted by Nickelless
quote:
Originally posted by starwarsgeek171
There is a lot of evidence to support a future decoupling of the gold/silver ratio (in either direction). It isn't written in stone.
What do you mean by a future decoupling of the gold/silver ratio? I thought this was just a historical average? I've been hearing everyone say that silver is underpriced according to its historical trend relative to gold prices, but I'm not sure exactly what you mean.
Here is a chart of the gold/silver ratio for 600 years. Notice a few things:
1. The ratio was 16:1 or less up to 1604 when a big silver mine was discovered.
2. The ratio was 20:1 until 1900. The Comstock Mine in Colorado was discovered in 1859 and the ratio spiked. As the mine was developed over about 40 years the ratio went to 60:1 which means people were rolling in silver.
3. The ratio has stayed above 40:1 ever since except for three spikes.
People who predict a return to lower ratios need to offer a good reason why it should. The alleged shortage has existed for almost 50 years and hasn't had any noticeable effect yet. It would require a shortage of legendary proportions, comparable to the legendary Comstock Lode, to return the ratio to a lower number for more than a brief time. |
A penny sorted is a penny earned!
Please use tinyurl.com to post links. Long links make posts hard to read. |
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TenBears
1000+ Penny Miser Member
USA
1021 Posts |
Posted - 04/07/2008 : 12:14:22
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I am "buying" copper and silver now. The reason for that is not really complex. I can get both metals at bargin prices in circulated coinage if I apply a little of my own time and labor. Once I have achieved my goals for these two metals I will continue to search circulated coinage for them and sell the excess. The sales from these will go into gold purchases. I may at that time start to hoard nickels as well. They intrugue me, but I only have so much play money to work with at this time.
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Knibloe, are you sorting half dollars to get your bargain prices? Those of us who report our half dollar sorts on this site have not been getting much significant. In fact, skunkings are regular occurrences for at least a few of us who sort halves. |
"Rich," the Old Man said dreamily, "is not baying after what you can't have. Rich is having the time to do what you want to do. Rich is a little whiskey to drink and some food to eat and a roof over your head and a fish pole and a boat and a gun and a dollar for a box of shells. Rich is not owing any money to anybody, and not spending what you haven't got." Robert Ruark
there are too wild Indians...
there are too wild Indians...
there are too wild Indians...-----still taunted
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 04/07/2008 : 12:36:32
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quote:
Originally posted by texcattlerancher
*****
I am "buying" copper and silver now. The reason for that is not really complex. I can get both metals at bargin prices in circulated coinage if I apply a little of my own time and labor. Once I have achieved my goals for these two metals I will continue to search circulated coinage for them and sell the excess. The sales from these will go into gold purchases. I may at that time start to hoard nickels as well. They intrugue me, but I only have so much play money to work with at this time.
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Knibloe, are you sorting half dollars to get your bargain prices? Those of us who report our half dollar sorts on this site have not been getting much significant. In fact, skunkings are regular occurrences for at least a few of us who sort halves.
I have been sorting dimes on and off.
2007 12,150 dimes sorted 1 silver dime.
That doesn't count dimes found in change, so actual it is worse.
-SWUSC
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`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 04/07/2008 : 12:40:06
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Also, don't forget that a lot of silver demand was in developing photos. Digital age as removed a lot of that demand.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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TenBears
1000+ Penny Miser Member
USA
1021 Posts |
Posted - 04/07/2008 : 21:08:08
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*****
I have been sorting dimes on and off.
2007 12,150 dimes sorted 1 silver dime.
That doesn't count dimes found in change, so actual it is worse.
*****
A number of us take skunkings fairly regularly.
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"Rich," the Old Man said dreamily, "is not baying after what you can't have. Rich is having the time to do what you want to do. Rich is a little whiskey to drink and some food to eat and a roof over your head and a fish pole and a boat and a gun and a dollar for a box of shells. Rich is not owing any money to anybody, and not spending what you haven't got." Robert Ruark
there are too wild Indians...
there are too wild Indians...
there are too wild Indians...-----still taunted
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Ponce
Penny Hoarding Member
Cuba
630 Posts |
Posted - 04/08/2008 : 19:55:41
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I hold my silver more as a survivalist more than as an investment.......... silver has a long way to go when compared to gold and more silver than gold will be sold in the future.
At this time I am using my one oz rounds to buy gas with an average cost of 0.88 cents per gallon. |
"If you don't hold it, you don't own it"...Ponce |
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knibloe
1000+ Penny Miser Member
USA
1066 Posts |
Posted - 04/08/2008 : 22:21:44
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TCR, I do sort halves and it has been a while since I was completely skunked on a box.
Starwars, your bit about gold being light, easy to carry and hide has convinced me to buy a little as soon as I can afford some. Also, my wife and I recently watched James Bond from Russia With Love. James had 50 gold soverigns hidden in his briefcase. It would be hard to hide and carry an equivalent $ amount of silver. |
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wolvesdad
1000+ Penny Miser Member
USA
2164 Posts |
Posted - 04/18/2008 : 13:56:56
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There was another thread about GOld outperforming Silver in the previous large drop(silver 21 down to $17)
But in this minor drop today, SILVER has held its on better! |
"May your percentages ever increase!" |
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JSutter
Penny Pincher Member
214 Posts |
Posted - 04/21/2008 : 19:32:59
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Here is a good article on why silver will outperform gold. You must be logged in to see this link.
I read an article on RFID chips that a lot of freight companies are starting to use to track shipment. Small quantities of silver are used as the antenna on each one. It is forecast that over 90 Million ounces of silver will be used on these in the next few years [WalMart just started requiring them on every pallet from every supplier if that tells you anything about how many will be made] and due to the very small quantities of silver used on each tag it is expected that the vast majority will not be recycled.
Take 90 million ounces off the market for that, however much is normally used in production that isn't recycle, and the millions of ounces being snapped up every month as investments and it's easy to see that the market will continue to tighten.
It's true that miners can produce a lot of silver if the prices go high but they really have no incentive to ramp up production until prices take off so they may be caught playing catch up.
I've been "investing" a lot in silver but I don't expect to make money from it. I just expect for it to hold it's value for me so that if I'm able to save enough this month to buy a weeks worth of supplies that hopefully ten or twenty years down the road it will still purchase a weeks worth of supplies. I guess I could sink that money into savings but I doubt the rate of return on the savings would keep pace with inflation over the next few decades.
If it does end up being a tightened market somewhere down the road and I can make a profit off of it and have enough to buy two weeks worth of supplies then all the better. |
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Saul Mine
Penny Collector Member
USA
343 Posts |
Posted - 04/21/2008 : 21:46:36
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Yes, digital photography has at last, after 25 years, made a noticeable dent in silver usage for negatives. Actually, most silver (about 60%) was used for X-ray negatives, but nearly all that silver got recycled. As digital equipment has been adopted for X-rays, some small amount of silver has been freed up, but not all at once, and only a little over half a year's production. (I think about 150 MOZ total.) With so many other uses being found for silver, that amount will get absorbed as fast as it comes available, and it WILL NOT be recycled again. So the digital photography angle hardly applies. It's true, but there is no effect on the fundamental problem: not enough silver for everything that needs it. Walmart just might decide to go back to bar codes when they can't get 90 million ounces for the RFIDs.
Silver as an investment: Silver is NOT an investment. It is in the same class as your spare tire and your insurance policy: stuff you hope you won't need but will be glad to have when you do need it.
Gold or silver "outperforming" each other: The ratio of gold price to silver price has been swinging between 40 and 100 for the last 120 years. It has gone below 40 just three times and once it went up to 158. Nobody has offered any explanation of why it should. It is one of the few things we can't blame on the Federal Reserve Act. Neither is there any reason offered for one "outperforming" the other. I suspect pundits are merely observing that the ratio has gone up or down, without knowing any more than that. After all, most market commentators get paid for sounding like they know something, not actually knowing it. The useful thing about the gold/silver ratio is that when it goes down to 50 or below you can swap your silver for gold, and when it goes up toward 100 you can swap your gold for silver. It's like getting free metal. Yes, this works. I've been doing it for years. It's a boring business; more than one swap a year is a roaring market. But if you do it right you can double your holdings quickly. And it's absolutely safe because you are always invested in hard metal. |
A penny sorted is a penny earned!
Please use tinyurl.com to post links. Long links make posts hard to read. |
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knibloe
1000+ Penny Miser Member
USA
1066 Posts |
Posted - 04/21/2008 : 22:42:58
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| Saul, I'm new to the PM game. I have some silver, mostly 40% halves. If I were to want to trade What is the easiest way that you would recommend? |
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JSutter
Penny Pincher Member
214 Posts |
Posted - 04/22/2008 : 09:32:07
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| I doubt Wal-Mart goes back, they're not for customer packaging but for palletized goods. It's a supply chain thing so they always know where pallets of goods are between the warehouse and the shelf. The tags are made with silver ink which is cheap for each individual tag but will really add up. The silver ink has been found to transmit responses from queries much better than copper which is why it's being used. The Department of Defense is requiring them from all contractors too. Between those two organizations figure how many suppliers will have to use them. |
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Know Common Cents
Penny Pincher Member
195 Posts |
Posted - 04/22/2008 : 19:56:37
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There have been several times during the past decade that I've sold silver to buy gold and vice-versa. It has the potential to be a risky move as you could lose on both ends of the transaction. Fortunately, I've been on the positive side of both in my swaps.
I practiced a lot before actually swallowing hard and made the real trade. I recommend trading in theoretical terms for quite awhile unless you have a crystal ball and know exactly what's going to advance at a rapid pace.
Take your total raw ounces of silver (rounds, junk silver, foreign, etc., but skip the collector coins) and start tracking that on a spreadsheet by consistently using the same source for daily closing figures. Do the same for actual or theoretical gold that you may have. Develop a daily ratio between the two and you should be able to determine which is gaining on the other after awhile. I recommend watching the trends for a couple of months before doing anything beyond that.
During those couple of months try to locate a trusted resource where you may be able to pull off the swap if/when you're ready. How much below spot for each are they going to discount what you have coming in to them? How much are they going to mark up the other metal that you'll be swapping into? You should be dealing with very small percentages on both ends and may find an agreeable dealer who's light in gold when you have it to swap, but has plenty of silver.
This certainly isn't for everyone, but it's a possible springboard to gain more of the metals that are in demand at that particular time.
There have also been some extended periods of time when I wasn't sure about which was the PM market was headed. I didn't do any swaps for months then and shelved any ideas of this creative manipulation. During those times, though, I still track and trend the value of my bullion gold and silver. Once the spreadsheet is set up, you can add to your holdings of silver or gold even in decimal equivalents. Keep good notes, though, about the quantities in your original formatting.
Just one person's opinion. I've been around long enough to see the rise of commodities even beyond my wildest dreams. I've also witnessed that fall of most everything else. Take the time to educate yourself. Also learn to recognize when a sucker punch is headed your way so you're not even in the audience of the boxing match at that time. |
Here in Wisconsin, we have some of the highest property and gasoline taxes in the US. We're squeezed so much, I have to make my daughter wear penny boxes for shoes. At least she has an endless supply. |
Edited by - Know Common Cents on 04/22/2008 20:03:38 |
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Saul Mine
Penny Collector Member
USA
343 Posts |
Posted - 04/23/2008 : 00:11:26
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quote:
Originally posted by knibloe
Saul, I'm new to the PM game. I have some silver, mostly 40% halves. If I were to want to trade What is the easiest way that you would recommend?
I suggest you go to You must be logged in to see this link. or the daily column You must be logged in to see this link.
That's where I originally got the idea. However, I think junk silver is currently below spot.
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A penny sorted is a penny earned!
Please use tinyurl.com to post links. Long links make posts hard to read. |
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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 04/23/2008 : 16:20:00
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| Value retention since correction: Gold stands at 88%; Silver stands at 82% |
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Silver Vs. Gold
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