Has Silver more monetary value than Gold

[nightowl]

I've been looking to see which one as the true monetary value .

In Silver defence it has got a lot more going for it as it can not be created by fiat / is divisible  / durable / convenient / consistent has utility value .

Silver can be used as a medium of exchange & a good store of value.

It is a fact that Silver has been used in more places & for longer periods of time as money than Gold .

We all have a vested interest in the monetary system holding together .

Precious metals are a barometer of world financial health.

If gold & silver start moving up in a manner similar to 1979-1980 then the paper money game is essentially finished.

Throughout all of recorded history when a country has adopted a monetary system founded on edict  the nation has had financial problems.

In 1971 the gold window was closed for the first time in history  the reserve fait currency is worldwide phenomena.

The price of silver is a function of understanding the market itself     when the market understands that money based on unsound principles cannot help but fail eventually  then true value of silver will be determined.

Until that time I'm going to keep staking   .

would like to hear from anyone in gold's defence  .

 

[HawkHybrid]

gold is useful and can last the test of time(resistant to corrosion).

this makes it suited as inheritance for many generations. golds

scarcity and hence higher value means silver is used for smaller

denomination trades.

 

HH

[KDave]

Both fit the bill as monetary metals, but silvers main downside is the majority of its current use in industrial application. More than half of its demand is for use in industry, though this trend is changing as can be seen by the silver institutes supply and demand report for 2015 and may soon be over taken by investment demand. 

Gold is more value dense than silver and so is more appropriate for large amounts of wealth. Historically both metals have their place in monetary systems but it is gold that has survived into the modern era with many governments and central banks holding vast reserves. Culturally gold is very important to many people around the world and this trend is very unlikely to change any time soon. Silver on the other hand is fighting an uphill battle against industry and gains in popularity when gold becomes expensive - for this reason it is often described as the 'poor man's gold' and attracts far more speculation than gold, though this appears to be changing as mentioned by growing investor demand. 

I like both, and hold both, but in a ratio of 15-1 silver to gold primarily because of the speculative nature of silver vs the monetary nature of gold. 

Good post got me thinking 

[Roy]

I think we need Keithoil's opinion here....

[Stu]

17 minutes ago, KDave said:

Both fit the bill as monetary metals, but silvers main downside is the majority of its current use in industrial application. More than half of its demand is for use in industry, though this trend is changing as can be seen by the silver institutes supply and demand report for 2015 and may soon be over taken by investment demand. 

Gold is more value dense than silver and so is more appropriate for large amounts of wealth. Historically both metals have their place in monetary systems but it is gold that has survived into the modern era with many governments and central banks holding vast reserves. Culturally gold is very important to many people around the world and this trend is very unlikely to change any time soon. Silver on the other hand is fighting an uphill battle against industry and gains in popularity when gold becomes expensive - for this reason it is often described as the 'poor man's gold' and attracts far more speculation than gold, though this appears to be changing as mentioned by growing investor demand. 

I like both, and hold both, but in a ratio of 85-15 gold to silver primarily because of the speculative nature of silver vs the monetary nature of gold. 

Good post got me thinking 

Is that your true gold to silver ratio or are you 15 to 85 respectively? Personally I am aiming for around 1 to 50 respectively And have managed to stay pretty close to this. 

Just realised the error of above post. You would think it would be the silver to gold ratio when expressing the numbers they way they do. E.g. 75-1

[Bumble]

Gold is traditionally what countries hold as reserves; silver is much too bulky for this role. Silver has traditionally served as coinage. The fact that gold has few industrial uses is a point in its favour as a monetary metal, because it means its price can go very high without disrupting the industries that consume it.

[KDave]

10 hours ago, Stu said:

Is that your true gold to silver ratio or are you 15 to 85 respectively? Personally I am aiming for around 1 to 50 respectively And have managed to stay pretty close to this. 

Just realised the error of above post. You would think it would be the silver to gold ratio when expressing the numbers they way they do. E.g. 75-1

My mistake Stu I confused my ratios - My target ratio is 15-1 silver to gold. 

[vand]

Gold is the, er, gold standard by with other monies are held against. Silver is also recognised as a monetary commodity and plays a crucial role. Much more than just "poor man's gold", it fulfills the role of being the preferred medium of exchange, while gold is the store of value. This point is important if you understand Gresham's law. People will hoard their most valued assets, not use them to barter and exchange. If silver wasn't used as money... something else would be, for gold cannot both be the best store of value and the preferred medium of exchange.

[KDave]

Interesting points but if we are talking about now, today, then silver no longer fulfils any role of being a preferred medium of exchange. It is primarily an industrial commodity first, with investor/speculative demand second, perhaps that could be described as the monetary element. It used to be the preferred medium of exchange when it also acted as coinage, but this is no longer the case. Gold on the other hand has retained its historical purpose as a store of value and acts as such today (central banks, governments, the very wealthy - actually pretty much everyone not in the west).

Personally I have always considered silver as more of a speculative investment given its price history, rather than as a vehicle to store value over the long term as I view gold. Perhaps this will change in the future as more and more people use it as an investment - if demand over takes industrial application? Would love to hear alternative evidence that would make me think differently about my investment in the modern context. 

[Webster]

What is the real advantage of gold over silver? Surely at this ratio its a steal to buy silver then re sell when the ratio goes down to switch to gold?

 

 

[HawkHybrid]

with hindsight when should you have switched over to gold?

maybe at the height ~2011 when the ratio was down?

getting a strategy together with the theory is not so simple.

 

HH

[KDave]

The ratio helped me buy at near the lows (unless the down trend resumes of course) so my thinking is if we go roughly by the 2011 peak it looks like just sub 40-1 is a good selling/swap point perhaps. If you go by the 1980 sell point then its closer to the historic monetary norm of 15-1. No idea though to be honest, the ratio on its own is not entirely reliable, silver was cheaper in £ terms when gold was lower and the ratio was still some way off its peak. 

[HawkHybrid]

what I'm saying is that when swapping silver for gold you

will most likely be at a top in the gold price so will watch

the value of your gold fall in currency terms. maybe a

more dynamic strategy is required?

 

HH

[KDave]

Good point I agree. Perhaps the ratio can be used instead as an indication of when both metals are approaching the peak as it did in 1979/80 and 2011, though there was some time between each metal hitting its respective high. That would in theory be an ideal time to swap both gold and silver for whatever asset is most undervalued at the time, real estate or stocks perhaps, unless it is your goal to swap silver of more ounces of gold all along of course. 

[HawkHybrid]

if the plan is to buy silver when the ratio is high and

then sell silver when it's low to re invest the proceeds

into maybe housing or stocks. then when should you

buy gold? 

 

HH 

[shemyaza]

HMRC's rules in barter trade are designed to take advantage of tops and bottoms, alongside CGT rules which rule past losses can be set against future gains therefore playing perfectly to the tune of ratio trading as the true metal trade. Do a pencil & paper (with calculator) test buy Gold at the low or Silver at the high from 1977 onwards, use the precise values and ratio's and watch how the metals triple (silver) and double (gold) when you ratio trade at tops and bottoms correctly. Triples and doubles takes into account premiums, vat and CGT which requires losses to cover gains to remove the paper currency aspect in metal growth at nil cost. Hence Derivatives are so massive now compared to paper money. I have a link somewhere which takes you directly to the pages on HMRC's website so you can read for yourself the rules. VAT is subservient to CGT so VAT cost can be used to offset CGT gains. I seriously could go on but I think of metal as like a Goose which just keeps laying Gold and Silver eggs for free which can't be cashed in until you absolutely need too. Sounds mad but your paper numbers will say otherwise.

[Bumble]

The gold/silver ratio does not have a lot of predictive power. Often when it is high, gold and silver both rise, and when it is low, both fall, but not always. Buying silver when the GSR is high looks OK, but buying gold when it is low is bad: probably better to move out of PMs altogether.

[KDave]

Oddly enough it does look rather coincidental, that when silver is cheap relative to gold that is buy signal for silver, but when it is extremely expensive relative to gold that is historically a good time to sell both! 

Edit - What bumble said!