Should I Trade/Sell My Core Gold Position For Silver?

[optionT]

With the silver rocket just beginning I was mulling over weather I should dump the gold and go all in with silver. I know, it's good to be well diversified, don't put your eggs in one basket, etc., but still.
:-\

[Awoke]

Tough call. I was just talking to a friend about the opposite: trading $5.00 silver for $1500 gold based on the ratio correction, but I think silver still has long way to move upwards.

Again, I am no economist!

[Ponce]

Depends on how much you will loose when you make the trade........but of course silver is going sky hight.

[TheNocturnalEgyptian]

The ratio right now is roughly Gold:Silver; 1:32


Arbitrage is an honest way to make money. Unless you think the ratio is going even lower, now is a good time to turn silver into gold - you get one ounce of gold for every 32 ounce of silver.


Then when the ratio goes back up, say to 1:60 or 1:70, you can trade your gold back into silver. You'll get, potentially, 60-70 ounces of silver back for every ounce of gold you purchased with those original 32 ounces of silver. You'll count your profit in ounces, and no usury is required.


For simplicity's sake, I don't include premiums when I do this math, because I don't know what kind of premiums you pay.


So should you trade gold for silver? NO - not when the ratio is this low.

[TheNocturnalEgyptian]

I forgot to add - some people think we've entered a new paradigm for Gold and Silver. Some people are saying silver is undervalued and we won't see high ratios again. Obviously I cannot tell you whether or not that is true. Perhaps in the future, we'll consider 1:32 to be a very high ratio, and 1:10 will be considered low. Wouldn't you all just love that?


But the above post works to make money as long as the ratio fluctuates - it doesn't matter if it goes up or down. As long as the RATIO between gold and silver is fluctuating, you can use arbitrage to make money.

[FunnyMoney]

A "core position" is not something up for sell. There are reasons to always hold a "core gold position" and those reasons exist just the same way there are also reasons to hold a "core food position".

You do not know what the future might bring. There are a number of loose cannons floating around the world. There's many scenarios where a core gold position could literally save your life. I would not sleep well without having a core gold position at all times. The Chinese understand this, in India they understand this, you need to also.

[TheNocturnalEgyptian]

Yeah, never sell all of it. You need flexibility above all else.

[Serpo]

Looks like its half then......... ;D

[Jim]

Most would have said that gold would have peaked long ago. The big question is definitely silver right with the price being more affordable. I don't think you should trade your gold for silver but just buy some silver instead. I would stay diversified. This time we are in is very unique and I don't think anyone can truly say what will happen in the near future.