Gold - Silver Ratio

[Jazkal]

http://static.seekingalpha.com/uploads/2010/5/24/545720-127471910861369-Matthew-Green_origin.jpg

Everyone on here that I've seen seems to be thinking the ratio is heading to 16 to 1, or lower. But according to this chart, it has only been that low 3 times in the last 100+ years.

Anyone have any links or books that cover this subject in greater detail?

[Bullion_Bob]

Sorry no book, but something that is notable is never in all recorded history has it been consumed into oblivion like it has been for decades with no end in sight. That, and everyone leveraged in debt up to their eyeballs with the world reserve currence about to pop.

[mamboni]

Have you read the most recent BMO Investment Report for Silver 2011?

It would be nice if we could upload the PDF file to GSUS so the members could read it - it's rather provocative IMHO.

Anyway, it can be obtained here, though you will have to register (it's worth it):

http://www.scribd.com/doc/52297403/BMO-New-Paradigm-for-Silver

I'm at work and don't have time to read all 59 pages in detail. But I skimmed the report and the executive summary is:

1. Lots of new silver coming on line after 2012 because of many new projects coming to fruition primarily primary silver miners and gold miners produsing silver byproduct, the bulk in the Americas.

2. Silver demand will increase but supply (see #1) will exceed demand creating sufficient surplus to depress silver price below present levels.

I would appreciate others' opinions on this report because I am skeptical of projections - they seem overly optimistic about silver production after 2012. Also, the USGS reprted that known silver reserves are to be exhausted within 10 years. Further development should exhaust reserves sooner, no? Or has the rise n silver price created a larger reserve base?

[undgrd]

With the MIC growing every day, I find it hard to believe we WON'T consume enough silver.


http://gold-silver.us/forum/general-discussion/by-silver-shield-the-elite-destroyed-3-tons-of-silver-last-week/
Quoted from the link above

Almost half of the cost ($269 million) has come from the 191 Tomahawk missiles that have been launched into Libya. I think it is extremely interesting to know that each Tomahawk has more than a monster box (500 oz.) of silver inside of each missile. Pure silver has the highest electrical and thermal conductivity of all metals. When there is a $1.5 million dollar missile is being produced to secure more oil for the Empire, the Elite will use only the best materials to ensure the best performing results.

So far the US has thrown 3 tons of silver at Libya just with the Tomahawk missiles. That silver is gone forever as it is blown to a million pieces. (Never mind the poor bastards at the at the other end of missile’s target.) If we added the 191 Tomahawks from this “Kinetic Military Action” to the 288 from Gulf War 1, the 325 used in Sebia and Iraq in 98, and the 725 launched in Gulf War 2 that is just over 800,000 ounces of silver or 25 tons of silver gone forever.

That is just from the Tomahawk missile program. What about all of the other weapons programs in the Empire’s trillion dollar a year arsenal? Every smart bomb, tank, helicopter, fighter jet, bomber, naval vessel, and sophisticated electronic computer has a certain amount of silver in it. As the world starts to become a more dangerous place for the Empire, more and more silver will be destroyed forever.

[Sparky]

...

I would appreciate others' opinions on this report because I am skeptical of projections - they seem overly optimistic about silver production after 2012. Also, the USGS reprted that known silver reserves are to be exhausted within 10 years. Further development should exhaust reserves sooner, no? Or has the rise n silver price created a larger reserve base?



The possibilities for supply and demand are too wide-ranging. I think a typical outlook for silver supply in 2015 is a 50% increase, or 1.5x. Let's say a low-end estimate is 1.25x, and a high end is 1.75x.

On the demand side, I'd say the best estimate is a tripling of demand. A low estimate would be a doubling. On the high side would be a quintupling.

So, if you can stand the math, a matrix of possible peak prices based on linear supply-demand impact and a current "stable" silver estimate of $35 would look like this:

Supply: 1.25x 1.50x 1.75x
Demand:
2x $56 $46 $40
3x $84 $70 $60
4x $112 $93 $80
5x $140 $117 $100

From this, I think the best estimate for a peak price is somewhere in the $70s, with a complete range of $40 to $140.

Note that there is a much wider range of possibly demand than supply, which I think will ultimately be the price driver more so than supply.

[undgrd]

Sparky.

Are there materials of similar properties that cost less? That could swing silver to the down side if the price starts climbing too high.

Example: Palladium started being used in Catalytic Converters when Platinum became too expensive.

[Plastic]

Sparky.

Are there materials of similar properties that cost less? That could swing silver to the down side if the price starts climbing too high.

Example: Palladium started being used in Catalytic Converters when Platinum became too expensive.



I was under the impression that the only metals close to silvers capabilities were the platinum group metals.

[Neuro]

According to Silverbach at old GIM a rather small deficit (a few percent) in Rhodium, took the price from $300 to $10.000 in a couple of years, the amount of Rhodium typically used in the applications where generally very small, but no other alternative was available. Isn't this also a fact with silver, and it's use in electronics and health care. For electronics you could use gold instead of silver...

[Ponce]

To me silver is now stading on its own two feet that without the aid of "big brother gold" will grow up to be a fine young metal.......I say this because as I said before......"People look at silver as metal to be use in the fabrication of products but see it in the future for its monetary value".......but of course the use of it in the fabrication of products will only make go up in value.

[Sparky]

I think this has been a consideration for a long time, but there is probably some minimum stable price point at which switching to an alternative is worthwhile. I don't think there's an alternative that can match the combination of reflectiveness, strength, and malleability, so it would be a compromise of quality.

[sirgonzo420]

I think this has been a consideration for a long time, but there is probably some minimum stable price point at which switching to an alternative is worthwhile. I don't think there's an alternative that can match the combination of reflectiveness, strength, and malleability, so it would be a compromise of quality.


That's not a problem.... we're used to that.

[Ponce]

LOL Sirgonzo..........but only if "Made In America".

[gunDriller]

Sparky.

Are there materials of similar properties that cost less? That could swing silver to the down side if the price starts climbing too high.

Example: Palladium started being used in Catalytic Converters when Platinum became too expensive.


copper is very similar in terms of electrical and thermal conductivity.

they are often used together, silver plating over copper plating over aluminum.

[Serpo]

Have you read the most recent BMO Investment Report for Silver 2011?

It would be nice if we could upload the PDF file to GSUS so the members could read it - it's rather provocative IMHO.

Anyway, it can be obtained here, though you will have to register (it's worth it):

http://www.scribd.com/doc/52297403/BMO-New-Paradigm-for-Silver

I'm at work and don't have time to read all 59 pages in detail. But I skimmed the report and the executive summary is:

1. Lots of new silver coming on line after 2012 because of many new projects coming to fruition primarily primary silver miners and gold miners produsing silver byproduct, the bulk in the Americas.

2. Silver demand will increase but supply (see #1) will exceed demand creating sufficient surplus to depress silver price below present levels.

I would appreciate others' opinions on this report because I am skeptical of projections - they seem overly optimistic about silver production after 2012. Also, the USGS reprted that known silver reserves are to be exhausted within 10 years. Further development should exhaust reserves sooner, no? Or has the rise n silver price created a larger reserve base?




Same old story with this report ,I am skeptical of this report also, certain things they dont seem to take into account ie massive inflation and massive demand.Worthlessness of money isnt exactly taken into account. ;D
https://doc-00-00-docsviewer.googleusercontent.com/viewer/securedownload/2pcr2himrco34u7kqfml7ch45idjl4cl/vqoqmmaje4hl6hsanjagcqrkrft6m83s/1301997600000/ZXhwbG9yZXI=/AGZ5hq_J8Y7pheeU_DgEp41UfnAg/MEJ3aTBHRVJIZ052Vk5UbGtZV00wTXpJdFpETTBOaTAwTTJaak xXSmxZamd0T0RVNU5HUmxNV0UwTVRJNA==?a=dl&filename=Silver.pdf&authkey=CJ3d5boN&sec=AHSqidaYCvJqkgwsZkRcbxVWvqL6nzBIUbi_cm1SqvrQgd _KCzFhY54vvk8SHKqG0LCNz3mvI7Q380kzbJyVbApgOLA5GOI6 5mqQDKes_lVe7_PrGk69CthfqKRyh8kSo99W9582EAHuSqlXUS 5JyClhOIz8QIY0CDnqItXXFc0mbWYJsM4tUR1DH6L8qos1iRaF idHQs6jxEngOhhz6Ce4j2WTj1HvE6lmI5oU6icHGUKHMk7mJmh 6JuB2E1TEigoNifvykwJkzQF4PxtShOuOjOxx-c4HRq9K2FPob5ElR0kT49VBvnvzo_t3hZ-efQ4l7O8zqdLLWCAYRehv9rf8ukFfL_XjDbhI1qU7DJdLuyx88 st2UqBEErttWifrd2Qpr5Pxh9TPX&nonce=iadlu0m307rne&user=AGZ5hq_J8Y7pheeU_DgEp41UfnAg&hash=or5l9kosm383pohmnqbgj3q10vjn2fke

[MAGNES]

Have you read the most recent BMO Investment Report for Silver 2011?


Sell all your silver at the seasonal high this april may,

you will be able to buy it all back in 2012 for $ 12.

I have made lots of good calls, this whole hat eating thing
started with me and Nacca, he owes me a few hats to eat,
I owe him one from the call I made on a $23 top Sept, lol ,
his concrete floors did not hold for years, lol .

And you know doc, I had a real time trading thread on SI ,
May 2008 high buying puts to Oct 2008 low buying calls,
real time . Tried to teach you guys to make some money.

These days I get all my reports from big banks and base
my decisions on those.

SELL !

[Ponce]

Only from my dead cold hands will you take my silver......and after 28 years of holding that's about the way that I feel now hahahahaahhaha.

[MAGNES]

Damn MAGNES,


" These days I get all my reports from big banks and base
my decisions on those. "
" 2012 for $ 12. " I'm kidding man. The doc knows it. ;D

I totally blew the Sept call too, even Nacca threw me overboard for that.
And I lost some money way beyond my budget for that.

I think the lid came off for good, good luck trading it and good luck getting physical
at significantly lower prices.

Watch gold, SI is going to rocket faster, they aren't capping like before. COT up but price is way up.
Did they lose control ? Looks like it.

Since Sept there is a huge change, never before did we have higher highs and a
breakout on SI with the highs on the COT chart, and volume was off the wall,
it looked like it was a technical mistake, it was not, volume 3 X OI in one day.
Before there was a 1 : 1 relationship with COT highs and SI highs, throw in
seasonal forces, some charting, knowing they even paint the charts, doing swing
trades was free money almost, especially going long after major corrections.
I don't see this working anymore. I went the the Pristine and Zeal trading school,
and was a reader of LeMetro, Zeal tactics, go long after seasonal hit and GC
correction of minimum 35 %, this worked for 3 years for me, and now I lost
a good portion of my account buying puts, like last two summers, options are
now super expensive now, no more $1500 play money trades, I wish I owned
more physical, lol,

I still think they will correct, but I don't see same opportunities, it's 2011 anyways.

I remember everything from 2006, everyone got suckered into SLV and 50 SI overnight, lol .

I don't care what the banks say, they are all stakeholders in the corruption game.
They have proven this over and over. Watching and owning some miners, traded them.
They too should of had online metal production, but where is it, nowhere.

We will have lows when JPM says so.

My post was sarcasm about past history, remember my calls on FAZ too, don't do it. LOL

The USD will take a dump, we are doing a slow burn right now, we will have manifest inflation
even without USD taking a dump overnight, same crap is happening now as pre 2007, even
ARMS have not peaked, it's a slow boil.

Don't take my advice for anything.

[Rebel Yarr]

I believe in the ratio - under normal times - makes a lot of sense to be trading it at 40, 30 ect...

Only thing I need to know right now....

production is 10 oz silver for every 1 ounce gold - or around there.... http://www.usdebtclock.org/gold-precious-metals.html

Silver is set to be extinct by as early as 2020 - hell, really? damn. Look into recycling costs to recover an ounce of silver. (google "silver extinct" - plenty of discussion on this based on demand/increasing demand)

Based on those two issues alone - I am not trading the ratio again til 15:1. I might not even trade any more. Silver is climbing its way to its rightful position. I could fully see how silver could be 1:1 or higher than gold in a decade.

I am going to "let it ride". Silver is a "win-win". Worst case it will stay up with inflation and has the potential to become the first element extinct or endangered at the very least on the Periodic Chart of Elements.

[mamboni]

Personally, I don't have the expertise, time or balls to try to trade silver, be it bullions or the miners. Magnes obviously knows a lot about trading and the potential for great gains [and great losses]. My gestalt is that physical silver is in very short supply and the paper shorts do not have the power to depress the silver price anymore like in years past. The silver fundamentals vis-a-vis depleted bullion, supply deficit, increasing demand and consumption, recent upsurge in investment demand and soon-to-be extinct reserves are the best they have been ever in history. If all this is true, we should be seeing 'peak silver' about now, so I am skeptical that silver production will see robust growth after 2012. Frankly, we might not have a functioning US dollar in 2012. We are on the verge of a currency crisis and a depression. The watch words are "wealth preservation" and "asset protection." Under these circumstances, silver should be held, tightly and not traded.

[Sparky]

I dunno. Generational bull PM markets lead to huge investments in mining and exploration, which has been going on for 5 years, but take 5-10 years to start producing. So we could well see a significant increase in production over the next 5 years.

But my point is that a 50-75% increase in supply could be swamped by a 200-400% increase in demand, led by investment demand and not industrial demand. That's what will bring silver into the $70-$140 range. I never thought it had much chance to reach $100, but the quickness of this latest upleg has made it seem a much more real possibility now.

A caution though: If this run-up is being fueled by short-covering, it will end in an exhaustion reversal when it's done, which is where I think my lowball $24 number comes in. What I'm wondering is if all the short covering will immediately be followed by JPM re-loading their short position and running the whole cycle once again, but being quicker to cover next time around.

[MAGNES]

Personally,


I wouldn't call myself a trader, just did some swing trades, mostly long term trades, I started
with a budget, the trades I did were never perfect, they did not have to be, and I made lots of
mistakes especially mistake number one , getting caught up in all the cheer leading, even LeMetro
did this, lol .

I followed Pook's trading strategy on gim, that was also Zeal strategy, they were in the
game for a few years, I came late to it in 2006. You can read their articles for free but
as a subscriber I also had access to their real trades, buying calls on major price destruction
during the summer, going out almost a year. They were always looking for 35 % corrections
in gold during seasonal lows, I traded SI calls. Follow gold , buy SI . I gave myself a crash
course in 2006 and even lost sleep as I lost some money too. My biggest strength is being
able to sort out good sources of info. Zeal and LeMetro made me, and the folks at Pristine, and FinancialSense website on FED. And the old school posters on gim on silver that disappeared,
like Pook and other COT analysts. Artificially induced corrections were opportunities to go long
comfortably. http://www.zealllc.com/

Obviously following this strategy is a big loser these last 2 years, waiting for major correction.

But buying and going long with no major corrections, buying at highs, COT short highs,
etc, seemed very foolish to me.

Imagine SI correcting percentage wise like 2008, just like 2008 nobody can imagine it.

But if it happens be ready, but I don't think we will see past corrections, SI went from 23 to 7.75 interday.
That would put SI at 13 interday. There are many more people awake and in the market today.
Buying physical has made the mainstream. $30 SI will bring lots of buyers, imagine what $20
would do. There will be no physical for sale looking at past history.

Jim Rogers just told everyone " do not sell your silver . " Very level headed guy.

I am watching gold, SI looks like it is going to follow gold in higher percentage gains.
When and if GC corrects like past history I will go long SI , hopefully we will have forces
working for us, COT chart and seasonals like past history being key. It's going to cost
a lot more and be far more riskier I think.

[MAGNES]

Anyone have any links or books that cover this subject in greater detail?


These guys just do chart analysis, do not cover FED, rigging and COT issues.

Some older ratio analysis.
http://www.zealllc.com/2009/sgrrev.htm

Some excellent older articles on corrections, etc,
http://www.zealllc.com/essays.htm

If you subscribe to the monthly newsletter there is no further analysis,
but mostly picks and strategies to make money, trades, etc,

The free articles are great with charts and complement other information.

[Rebel Yarr]

Just because you believe in the long term fundamentals of silver doesn't mean you can't do short term paper trades! This volitility is a wet dream for traders. It is almost too easy - when you know the long term fundamentals.

[Sparky]

...
It's going to cost a lot more and be far more riskier I think.
...


Quoted for truth, regarding the precious metals trading game. Is $35 a correction, or $25? Is $39 silver a high price or a low price?

I've learned more about markets from Zeal than from any other source.

[Sparky]

Just because you believe in the long term fundamentals of silver doesn't mean you can't do short term paper trades! This volitility is a wet dream for traders. It is almost too easy - when you know the long term fundamentals.



What volatility? Silver's been going up for 9 months. When it went from $18 to $30, who knew the correction to $27 would be your only trading opportunity? Or the brief dip from $37 to $34? I agree with Magnes, silver is now a very tough trade. Knowing the fundamentals are great doesn't help you if you never get a big pullback.

I agree with you on paper, though. If silver drops to $20 and you can't find any physical, then buy the damn paper. And then when it goes back up to $40 and physical is plentiful, convert the paper to physical! Rinse and repeat, and you will end up with a pile of physical. Some day paper may implode, but with each cyclical conversion to physical, it will matter less and less to you if it does. It's just a temporary vehicle.

[Rebel Yarr]

I'm talking the volatility of the last 2 years. We will have more - and there have been some decent ups and downs even in the last couple months. I haven't done much spot physical trading this year - more of the miners HL was a great one with some big 5%+ moves up and down this year as was SIL

[FunnyMoney]

Sell all your silver ... you will be able to buy it all back in 2012 for $ 12.

...

...SELL !



I seem to remember some sell suggestions as we started this run past 20 an on. What makes you so sure that now you're finally going to be right this time?


I would not be so bold as to call the wall of worry and a push down all the way back to that low. Buying a ticket into the train of worry has never been that easy. Silver is going to run out in terms of enough supply and the years are counting. We may be already on a countdown in the single digit. Some say you now only need to wait 9 years. The world consumes nearly a billion ounces per year and it is expected to go up huge as the need for alternative energy sources become a major driver of demand.

The price of silver is easily headed toward three digits now.

I would be very careful about letting go of any.

[Serpo]

Sell all your silver ... you will be able to buy it all back in 2012 for $ 12.

...

...SELL !



I seem to remember some sell suggestions as we started this run past 20 an on. What makes you so sure that now you're finally going to be right this time?


I would not be so bold as to call the wall of worry and a push down all the way back to that low. Buying a ticket into the train of worry has never been that easy. Silver is going to run out in terms of enough supply and the years are counting. We may be already on a countdown in the single digit. Some say you now only need to wait 9 years. The world consumes nearly a billion ounces per year and it is expected to go up huge as the need for alternative energy sources become a major driver of demand.

The price of silver is easily headed toward three digits now.

I would be very careful about letting go of any.


Anyone on this forum that says sell is usually kidding unless of course they are serious

[mrnhtbr2232]

So then it begs the question: if they eventually lose control of manipulating the price side, how long before the government comes in and readjusts things to manipulate the sell side? Silver goes to $100 this year - the Feds step in with a new metals definition in the tax law and 70% penalty upon sale - nothing would surprise me anymore.