How poorly Gold has performed priced in Silver

[Quixote2]

http://www.ritholtz.com/blog/2010/11/quantitative-mining-debasing-gold/

“Quantitative Mining” Debasing Gold

By Barry Ritholtz - November 11th, 2010

My friend Paul Kedrosky and I were discussing the absurdity of pricing the market in Gold last week. Paul is “always uneasy about these ‘Let’s price Thing X in Commodity Y’ exercises. (See his chart of the Dow priced in gold since 1900 here http://paul.kedrosky.com/archives/2009/11/the_dow_in_gold.html).

I decided to take that to another level, and make my gold bug friends lose their minds: As we all know, Gold (atomic symbol AU) is a barbaric relic — and the only “True” currency in the world is Silver (atomic symbol AG). That’s right, Silver.

Proof of this is how poorly Gold has performed priced in Silver.

Its obvious from the chart below that Gold has no intrinsic value. Forget QE, the Gold Miners are doing QM Quantitative Mining. These irresponsible Miners are “printing gold” by scraping it out of the ground as fast as they can. They are debasing it as a store of value, and are no better than central bankers with their fiat currencies and printing presses.

Silver, not Gold should be the reserve currency of the world!

>

See how poorly Gold has performed priced in Silver


http://www.ritholtz.com/blog/wp-content/uploads/2010/11/Gold-Priced-in-Silver.png

[gunDriller]

gold holds its value better when silver is "crashing" (e.g. when silver climbed to $29 & then dropped a few $, last week, somewhere between 7% and 11%, gold only dropped about 2%).

[1970 silver art]

Silver = more volatile but greater chance for huge % increases in $ price. The "rabbit" of the precious metals

Gold = more stable and less volatile than silver but less potential than silver in terms of % increases in $ price. The "turtle" of the precious metals.

[Ragnarok]

http://www.ritholtz.com/blog/2010/11/quantitative-mining-debasing-gold/

Proof of this is how poorly Gold has performed priced in Silver.

Just a heads up - the chart shows the performance of two ETFs, not two metals. Let's see the real chart. It may look similar, but the point is don't try to blatantly pull wool over readers' eyes.



Its obvious from the chart below that Gold has no intrinsic value. Forget QE, the Gold Miners are doing QM Quantitative Mining. These irresponsible Miners are “printing gold” by scraping it out of the ground as fast as they can. They are debasing it as a store of value, and are no better than central bankers with their fiat currencies and printing presses.

Silver gets consumed. If dollars were consumed like silver is and has been, they too would be worth more than they are today.
And anything that is consumed is not the best choice for a reserve asset, even if it is also valuable.

2c, R.

[horseshoe3]

Short term, the OP would appear to be correct. But if you look at the long term, or better yet, the LONG term, you see that silver is just now catching up to gold. We are just now seeing and end to the ridiculously high ratio.

[gunDriller]

Silver = more volatile but greater chance for huge % increases in $ price. The "rabbit" of the precious metals

Gold = more stable and less volatile than silver but less potential than silver in terms of % increases in $ price. The "turtle" of the precious metals.


if silver is the rabbit, how does the Canine thing play into it ? is it the Dog-Rabbit ?

[1970 silver art]

Silver = more volatile but greater chance for huge % increases in $ price. The "rabbit" of the precious metals

Gold = more stable and less volatile than silver but less potential than silver in terms of % increases in $ price. The "turtle" of the precious metals.


if silver is the rabbit, how does the Canine thing play into it ? is it the Dog-Rabbit ?


Thanks for bringing that up GunDriller. I was just attempting to use that as an analogy. Just that we are clear here...........Silver is a DOG. Silver will ALWAYS be a DOG regardless of how much it outperforms gold. The "rabbit" of the precious metals is the DOG (a.k.a. silver). ;D Hopefully that clears up everything. ;D ;D ;D

[gunDriller]

if silver is the rabbit, how does the Canine thing play into it ? is it the Dog-Rabbit ?


Thanks for bringing that up GunDriller. I was just attempting to use that as an analogy. Just that we are clear here...........Silver is a DOG. Silver will ALWAYS be a DOG regardless of how much it outperforms gold. The "rabbit" of the precious metals is the DOG (a.k.a. silver). ;D Hopefully that clears up everything. ;D ;D ;D


maybe silver is a Beagle. like a Rabbit, it has Big Ears.

http://catchadreamkennel.com/images/9-28-09/100_0635%20Silver,%20Goldie,%20Platinum.jpg

the beagle on the left is named "Silver".

also, like a Rabbit, a Beagle has a good sense of smell, so it can smell out the banker's bullsh*t.

[1970 silver art]

Nope. Not a Beagle. Good try. ;D This is the master that every silver bug bows down to.........................Silver is a DOG and I am standing firmly by that statement. ;D

[gunDriller]

Nope. Not a Beagle. Good try. ;D This is the master that every silver bug bows down to.........................Silver is a DOG and I am standing firmly by that statement. ;D



Damn ! i was beginning to like that rabbit metaphor. ;D

rabbits can wiggle their nose ... sort of how the silver price wiggles as it's sniffing out a fair price ?

[1970 silver art]

Nope. Not a Beagle. Good try. ;D This is the master that every silver bug bows down to.........................Silver is a DOG and I am standing firmly by that statement. ;D



Damn ! i was beginning to like that rabbit metaphor. ;D

rabbits can wiggle their nose ... sort of how the silver price wiggles as it's sniffing out a fair price ?


Gundriller, you are making good points. If silver wasn't such a DOG, then I would agree with you.

[TLM]

Silver is almost back to even today, while all the other metals are still down significantly (gold -$22, plat -$28 and pal -$25)
Silver typically under performs Au on a down trend (increasing GSR) but today it has out performed Gold (decreasing GSR),
which I see as very bullish for silver.