silver to gold ratio

[jim4silver]

The ratio has moved fairly quickly from recent high of 67 or so down to 61 or so today. Hopefully that ratio will keep tightening because I hope to one day sell maybe half of my silver to buy gold if/when the ratio gets to 35-40 to 1 or so. Although I believe we could see short term drops in the ratio that gets to maybe 25 to 1 or so, I doubt it would last long. I don't buy into the theory that one day the ratio will reflect the true supply in the earth which is 9 to 1 or so even though that sounds logical on the surface. Higher prices in silver in the future will shake loose enough supply from stackers holding now that possible mining shortages won't really play into the price action for a few years at least I believe.

When we hit the recent high in April 2011 the ratio was around 35 to 1 or so. If someone with foresight had sold silver and bought gold around that time (I wish I would have done that), they could have almost doubled their silver position by selling the gold and buying silver over this past summer (I know taxes and premiums on buy/sell will affect that somewhat).

Gold Silver Ratio Charts | Kitco

Just my opinion.

Jim

 

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[TreasurePirate69]

I did some research on this a while back and what I found is that the supply ratio is not really indicative of the price ratio for most metals. For example, you can look at the supply ratios of copper, aluminum, and nickel vs silver and gold and the corresponding prices do not appear to be correlated at all.

Using Econ 101 simplifications to gauge future prices goes out the window if the current price is not also based on Econ 101 simplifications.

By the way, I have no problems at all with the way you are using price ratios as a general guideline for which metal may be overvalued in relation to the other. My big beef is with people who try to figure out the price of silver based on some mystical ratio that was created back in a time period where the price of silver was heavily controlled by the government in order to make things simpler and more consistent.

 

[Marchas45]

I hear you Jim that is one of my plans when the ratio gets close no matter the price, Sell and buy Gold if I can find it. Lol

 

[jim4silver]

Make that ratio now 59 and change. Hope it keeps dropping.

 

[jim4silver]

Can I get a 58 and change? Yes for now but things seem to be weakening a bit.