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utoh123

Silver to Gold ratio is around 78!!

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2 hours ago, utoh123 said:

In light of this unheard of ratio- it appears that silver is the better investment.

Its not unheard of.  And the ratio could get wider.  Some silver is a good thing, but get some gold too.  My 2 cents anyway.

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Logic would dictate that silver is hugely undervalued as little has changed in production cost or use. The only conclusions I naievely draw is that the silver price has deliberately been driven down by big brother and / or it has temporarily fallen out of favour with big buyers like China, Russia and Asia. I live in hope that one day silver will bounce back to £25 per ounce or higher and for stackers piling in whilst silver is cheap, nice gains are to be had. On the other hand the price might remain depressed for a very long time. Unfortunately no-one can predict the future price or silver' s investment potential. At current spot one could argue that it can no longer be classified as a precious metal.

 

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the gold and silver ratio assumes that you can replace 1 oz

of gold with (currently) 78 ozs of silver. how many people

wear 78x silver band wedding rings?(it's ok, if that wedding

ring corrodes over time I've got 77 spares waiting to take it's

place. way to go to impress the ladies) culturally silver just

can't replace gold. banks hold gold and not silver. gold is

investment silver is speculation. year on year the price of

gold has risen this year. the silver price is flat.

silver probably will have it's time, timing it can be tricky

though and it could be a 40 year cycle.

 

HH

Edited by HawkHybrid

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2 hours ago, Pete said:

Logic would dictate that silver is hugely undervalued as little has changed in production cost or use. The only conclusions I naievely draw is that the silver price has deliberately been driven down by big brother and / or it has temporarily fallen out of favour with big buyers like China, Russia and Asia. I live in hope that one day silver will bounce back to £25 per ounce or higher and for stackers piling in whilst silver is cheap, nice gains are to be had. On the other hand the price might remain depressed for a very long time. Unfortunately no-one can predict the future price or silver' s investment potential. At current spot one could argue that it can no longer be classified as a precious metal.

 

I would agree with almost all of this, except to say that silver is definitely a precious metal.  Its main problem (from an investment standpoint anyway) is that there is no real price discovery in rigged markets.  As long as they can keep the average jane and joe from getting interested in holding physical, the phony paper/digital games can move spot down (and keep a boot on its head). 

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The ratio you are looking at is the paper price of the metals, if you look to physical and include costs such as buying premium, lower % in premium recouped when selling silver, the real ratio is much lower for private individuals wanting to trade physical.

I read that paper silver is being sold to drive gold prices down, so they are linked but not in a monetary capacity, the label precious metal is nice but an irrelevance imo. There is a decent investment case for silver in industry, so it's worth holding as it gives a wide exposure and chances for gains when gold rises. Gold is the more practical of the two for physical though and it's primary investment case is it's continued use as non inflationary money, which is evidenced in its continued use as money on the sovereign level and being held and accumulated as reserves by nations and banks. Bearing in mind who holds gold and who holds silver, gold has the greater potential for future revaluation under a controlled reset. My preference is gold. 

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And what's to stop the ratio going up to 100+ ?  Gold and silver are quite different, both in their supply and demand characteristics. Gold is mainly mined from primary gold mines, while silver is mostly a by-product of mining other metals. Gold has huge stocks of inventory in the form of bullion: the ratio of the stock of gold to annual production is nearly 50 to 1, while silver has comparatively small stocks. Gold is kept as a store of wealth and has few industrial uses, while more than 50% of silver produced each year is consumed and not recycled. The metals are so different I wouldn't expect the gold/silver ratio to have any particular significance. The gold market is sufficiently large that the time may come when physical demand for gold breaks the control of the paper market traders on Comex. Many have predicted this, though it hasn't happened yet. But the silver market is much smaller than that of gold and so it is easier to manipulate: maybe the traders on Comex can keep the silver price low indefinitely. Believing that the gold/silver ratio will go lower is basically a speculation on silver functioning as the "poor man's gold" and consumers switching to silver when they cannot afford gold.

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No one  knows how much metal is in the ground they can only guess!  Silver costs 8usd to mine in a silver mine obviously next to nothing as a by product in copper or other mines.  Gold mining is different huge amounts of earth are moved for little gold and a lot of gold miners are in big debts still from the last expansion.  If you look back at charts 100-1 is not unheard of nor is 16-1 or 30-1 they are extremes.  If you want to play the ratio game use gold money or bullion vault etc. 

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IMO we are getting to extreme ratios now..

Dow/Gold is now 19.7. Hasn't been that stretched except for a couple of times in the last 100+ years, and considering the gold/silver ratio is pretty stretched too, silver seems very cheap now vs stocks.

 

dow-gold-ratio-04.01.2017.jpg

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On 10/12/2017 at 21:38, Niels87 said:

I own 100% silver. I want to swap half of it to gold but the ratio is holding me back. 

I hope to see a 50-1 ratio in the next 10 years.

 

Yeah, likewise. I'll continue to buy silver at these prices, but considering how much silver I already hold I will switch to gold when the GSR returns below 70.

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