Predictions of the Gold-Silver Ratio

[Serpo]

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After this correction, the gold-silver ratio – very simply, the dollar price of gold divided by the dollar price of silver – is back to 41 this morning. One week ago today, when the metals were at record highs, the ratio was 32.

This number is important in terms of the long-term trend. A few years ago, Tennessee bullion dealer Franklin Sanders assembled this chart going back to the Coinage Act of 1792. We’ve updated it to the present day:

Gold-Silver Ratio, Yearly, 1792-2010

In the century since the creation of the Federal Reserve, the ratio’s been all over the place. The key is that it’s bottomed at or around 16 three times in the last century – 1919, 1968 and 1980.

Sanders is among many who believe long term, it’s headed back toward 16. Canadian fund genius Eric Sprott is another. Sixteen was the ratio for centuries before massive silver discoveries in the Americas in the 1800s.

With gold at $1,500 today, a 16:1 gold-silver ratio implies $94 silver. That’s a compelling case for silver… and with the ratio reverting for the moment above 40, silver’s on sale


http://dailyreckoning.com/predictions-of-the-gold-silver-ratio/

[FunnyMoney]

I think we will get to about 6:1 by 2020-2024. If the USD doesn't go into hyperinflation before then, we're probably talking about only $8000 gold and $1300 silver. After that it will depend upon what the world looks like. If the status quo survives and industry is unable to find alternatives to silver consumption then the gap will probably close even further. Under a heavy industrial consumption scenario, we could get to 2:1 in another 10 years or so after.

[Serpo]

Is that 6 gold to 1 silver ;D

[Neuro]

Yes it will go down to 16:1 possibly even 10:1 or 6:1, for a very short time, a few years later. Among gold/silver bugs I believe we have a underground bunkerwall of resistance at 16:1... Prior to industrial usage of primarily silver, the ratio was kept stable, due to their mainly monetary usage. At this point I don't think silver will ever make a comeback as a monetary metal, even a small country would need something like a 100 million oz of silver to make a freely circulating coinage, there just isn't enough easily available silver around to make that happen... So we will have constantly fluctuating prices between gold and silver... For the next few months I think g/s ratio will go up to somewhere between 50-60, for a short time in the summer, go down to low 20's in April 2012 (Gold 2000-2500, Silver 100-125)..., Summer 2012, Gold 16-1800, Silver 50-60, for a ratio of around 30. Spring 2013, Gold 4-6k, Silver 250-400, ratio at 16, gold/silver prices remain quite stable over summer 2013, but high food and fuel price inflation kicks in, hyperinflation begins in Autumn 2013...

Ponce should buy his Silver Island in spring of 2013, that's when the Island to Silver ratio will be the best! I'll bring my tooth brush!