Minimize

Welcome!

Everything from gold to silver to the conventional markets and currencies around the world

July 15, 2014

Click download link to listen on this device: Download Show

Discussion
23 Comments
    Jul 15, 2014 15:08 AM

    I guess I wonder why silver would have to return to an historical ratio with the gold exchange rate. I wonder if that historical ratio is from the era when silver and gold were both used as money in various countries, or at least both backed the paper currency created. I am not sure that is so relevant today since the paper currency is backed by nothing. I am not sure we have to return to a 16 to 1 ratio, or even very close. If I am wrong, though, I sure am going to wish I was more heavily weighted to silver, since right now I am much more weighted to gold of the two. Just “throwing this out there”.

      Derek…………..there are some great charts that show the importance of silver throughout history………depends on how far back you want to go. You can start with the ROMAN Empire……fast forward to 1600……..fast forward to 1890 America……..You can even check out some old currency bill 1957, 1890 treasury bills, ………Have some fun.
      And you might get an idea, why , the ratio is important…..and why you might want to own some silver……….best to ya……………….respectfully,,,,,,,,,,,,,,,jerry

        Jul 15, 2014 15:40 AM

        You bring up some good point Jerry. What do you think would be a reasonable range for the gold:silver ratio?

          16 to 1………..could even go to 10 to 1 ………..The 16 to 1, dates back to Newton, as CFS pointed out one time ………..16 to 1 was thought to be the balance according to what was thought to be available to mine at the time. But, we could have an entire show based on the ratio and why it should or could be ………

      Jul 15, 2014 15:37 AM

      Good topic of discussion Derek. I have trouble fully believing that the gold:silver ratio has go back to their historical averages as well. Silver has been embraced so much for its industrial uses I find that the narrative has changed recently. Not to say it can not regress back to the historical narrative of a true precious metal. I personally hold more physical silver than physical gold but on the stock side I hold more gold focused stocks. In the long term they will both be a good play in my opinion.

      GH
      Jul 15, 2014 15:31 PM

      I agree, no necessity to return to ~15:1. On the other hand, I could see it going even farther, to 10:1 or less, as silver is so useful, and is consumed so that above-ground stocks are small relative to gold.

      Jul 15, 2014 15:14 PM

      Forget about the GSR. If above ground silver bullion is as rare as advertised then silver should be priced with no reference to gold. Only total world fiat or GWP divided by real tradeable silver ounces. Same with gold. Real metallic ounces of refined bullion only.

    bb
    Jul 15, 2014 15:28 AM

    Something to consider Derek.

    Jul 15, 2014 15:51 AM

    I look at the 16 to 1 ratio as being an historic top. Think 1980 as the last.

    found this interesting short read while look for the exact date
    http://smaulgld.com/price-silver-1979/

      Jul 15, 2014 15:41 AM

      Thanks for the link FP!

    Jul 15, 2014 15:04 AM

    Saw a ping back on the comment above and started listening.

    @ Smaulgld.com we cover the gold silver ratio but also the silver to gold sales ratio

    Here is the current state of play- June Ratios and charts
    http://smaulgld.com/silver-gold-sales-ratio-june-2014/

    Here are the ratios historically:
    http://smaulgld.com/the-gold-silver-ratio-vs-the-silver-gold-sales-ratio/

    Jul 15, 2014 15:05 AM

    I have been reading a lot lately of if there is a supply shortage that jacks up the price, that it would be more likely to happen to silver than to gold. I’m not giving a date as to when that might occur (if ever) but if it were to occur in this new leg of the PM bull market, I think you could see the gold/silver ratio even out quite quickly! Also it could even out if the regular investor ever thinks they need silver to use as currency in the case of a fiat meltdown since silver is cheaper and thus easier to buy things like bread than gold.

      Jul 15, 2014 15:43 AM

      A supply shortage should definitely move prices much higher. The only issue I see is that when there are stories of physical shortages in other countries investors have not seemed to take note. Maybe it was because these shortages were short lived… Thanks for the comment Wiseguy

    Jul 15, 2014 15:11 AM

    I would think that the prices of silver and gold take off when there is an inability to deliver physical metal on contracts-where the counterparty demands delivery and the bullion banks don’t have enough metal to lease or sell.

      Jul 15, 2014 15:46 AM

      Welcome to the forum Smaulgld! I enjoyed the link posted above to your site. Please keep us up to date with your findings as well.

      It will be the day when the banks start taking delivery. I think all the banks know the physical is not there to satisfy delivery. Just look what happened to poor old Germany when they asked for their gold back.

    Jul 15, 2014 15:09 PM

    Cory- the German situation is so convincing as circumstantial evidence that the Fed has leased or sold Germany’s gold.

    If they had it, they could have returned it. They wouldn’t say it would take 8 years to give it back and THEN not even begin to deliver it in amounts to meet an 8 year time schedule.
    China and Russia are buying gold at a furious pace. Some suggest that gold from the GLD EFT and from the Fed’s custodial stash and the US holdings have gone to satisfy that demand.
    I am doing a two part series on gold and silver manipulation.
    The first part covers all the seemingly obvious manipulation that has yet to be found officially http://smaulgld.com/gold-silver-price-manipulation/

    The second part reviews all the “legal” silver and gold manipulation. Once we realize that the Fed and the Treasury have a vested interest in keeping the price of silver and gold down because they are monetary competitor, its easy to see why manipulation takes place and why nothing is done about it.

    I should part 2 done this week.
    Manipulation will end ONLY when they can’t back it with paper anymore

    Jul 15, 2014 15:51 PM

    The 16:1 ratio is relative to the amount of silver vs gold in the earth. Based on that fact alone the price ratio is way out of balance. Then you factor in the industrial uses where the silver is not recoverable and simply goes away. You could easily argue a 10:1 ratio in the future.

    Jul 15, 2014 15:19 PM

    One or may be two billion ounces of silver bullion divided by how many ounces of gold bullion equals what ratio gentlemen? Things have changed since the 1960s and 70s adjust your ideas accordingly.

    Jul 15, 2014 15:26 PM

    Something else to consider is- multiply the known silver times the current low price and you can see that a wealthy individual could probably buy all of it!

    Looks like everyone is reading the same info. on the ratios…………

    Well,,,,,,,,,we could all agree 66 to 1 is way out of WACK…………….

      EVEN at 33 to 1 , silver should be twice as much as it is now…..back up to the $40’s

      Silver has been manipulated more than gold , as far back as 1890, but, then just go back to Roman clipping times………….a lot more things going on in silver history than gold history……………
      In, 1964, there is some interesting stories around the silver manipulation.
      SILVER might be the SLEEPER OF ALL TIMES……………