If this doesn't make you want to buy some Ag

melbo · Feb 26, 2007

From GIM,
http://goldismoney.info/forums/showthread.php?t=113835

Gold : SIlver Ratio

For some time I have been watching the gold to silver spot price ratio. With gold at $685.50 and silver at $14.61, the ratio is 46.92 to one ( of vise versa; I’m not into splitting hairs here) at 8:00 A.M. 2/26/2007. It had been hovering around 50 to one for some time and then began outperforming gold as PM prices rose.

What I am wondering is at what point in time silver may significantly run ahead of the gold price rise. When will we see the 15 to one ratio ? And moreover, when will we see the 40 to one ? Or the 30 to one ratio ? Or the 20 to one ratio ? Or even some supply shortage that could cause a panic that could propel silver beyond our imagination ?

If history is any guide, what was the gold : silver ratio when gold rose to $700 on its way to its peak of $850 on 1980 ? We may be comparing apples to oranges here since the Hunt brothers were trying to corner the silver market. On the other hand, there was a government stockpile of about a billion ounces of physical silver back then. And that is gone now due to silver’s being consumed. The gold is still around but the silver is gone. Is a light going off in your head ?

What I am getting at is that I think there may soon be a dramatic rise in silver in relation to gold’s price. It could be slow and steady as we have witnessed lately. An orderly ratio decrease toward or even beyond 15 to one.

Another possibility is that the Comex could default on silver. As we all know, there isn’t nearly enough physical silver to cover the shorts on the Comex.

Two recent articles point to this coming gold : silver ratio event. The first by Lee Rogers states that he expects silver to rise to between $30 and $40 over the next two years. Just before that he states that he sees gold at $1,000 in the next couple of years. That would put the gold : silver ratio at either 33 : 1 or 25 : 1.

Gold and Silver Price Surge is Just the Beginning

http://www.gold-eagle.com/editorials...ers022507.html

The second article by Clive Maund states that the silver breakout is in position to occur after it surpasses last year’s $15.20 high. He states that silver has arrived on the threshold of ‘The Big One” and that this could involve a $1 to $1.50 up day. He also states that this event will mark the start of a powerful uptrend. Yikes !

Maund On Gold And Silver

http://www.gold-eagle.com/editorials...d022507pv.html

Adding complexity to guesstimating when and how much silver will rise is that the 1980 PM highs of about $850 and $55 are not adjusted for inflation. Therefore, some financial writers have stated that gold would have to rise to over $2,000 and silver to over $130 in order to equal what happened in 1980.

I also wonder if silver being in short supply now as opposed to 1980 will propel prices far beyond the near 15 to 1 ratio of 1980. I have read that some feel that silver will amaze everyone and approach the price of gold. One even predicts that silver will surpass gold. Wouldn’t that be a hoot ?

The only way I could envision this parabolic rise in silver could be wide recognition that there is literally no silver to be had. Ted Butler has written extensively about this very real possibility. The ensuing silver market would be in disarray as investors and speculators became aware and jumped on the bandwagon, thus exacerbating the shortage. Demand gone parabolic with no silver to be had. Knowing the law of supply and demand, what do you think would happen ? It is this wide realization and therefore investor demand that is the wild card in silver investing and what some here at the GIM forum call the booster rockets that can propel silver prices beyond belief. Investors driven by both greed and fear of being left behind are the most powerful motivating forces. So we watch and wait.

All of my questioning leads to when the ratio will be most advantageous to trade some silver for gold. I know this is on the minds of many PM investors. I just want you to be aware that silver may well surprise you and trading all of your silver for gold when the ratio approaches 15 to 1 may not be the best idea. Maybe better to continue to hold some silver for the long haul. It is impossible to tell what the future will do. It is only a guess and a heads up.

Look at platinum. It is at about $1,234 today. Why ? Because that is what it is worth to the world due to its supply/demand factor. It has never been used as money like gold and silver. It’s demand is strictly industrial.

Now look at silver at under $15. Silver has more varied industrial demand than any other precious metal. I have read that there are more new uses for silver being discovered that all other metals combined. More patents being granted also. Additionally, silver has been used as money throughout history, even more than gold which so many think of as historical money. Compared to silver, gold has few industrial uses. It is more a storehouse of value/wealth. That is why 95 to 98 percent of the gold ever mined is still with us.

What happens when industrial demand for silver cannot be met ? The third world is developing by leaps and bounds. They will need more silver for their electronic gadgets. They may even want some family photos. Do you really think they will use digital cameras, computers and printers ? No, they will only be able to afford cheap cameras that use silver in the film development process. In fact, I don’t like digital photos made on a computer; they fade over time and even when newly printed they look like crap. Just because silver photography demand has slowed as a result of the digital camera, this future third world demand may come as a shock to the silver demand.

Just how long do you think silver can remain at these prices in view of where we are at today ?

This is the reason that several financial writers have stated that they believe that silver is the best investment in the world.

A force majeure on the Comex silver exchange is inevitable according to Ted Butler and other financial writers. When that happens, I hope no one will regret not having enough silver in possession.

Best wishes and JMHO,

agnut
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Bear · Feb 27, 2007

As well as Au, Pd, Pt, Cu, Al, Co, Cr, Ni, Fe, Mg, Sn, Ti, V, W, Zn and don't forget your U....

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If this doesn't make you want to buy some Ag

melbo Hunter Gatherer Administrator Founding Member

Bear Monkey+++ Founding Member Iron Monkey

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If this doesn't make you want to buy some Ag

melbo Hunter Gatherer Administrator Founding Member

Bear Monkey+++ Founding Member Iron Monkey

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