N.quote" Besides, silver is much more affordable for the average person....who will probably be getting poorer (in relative financial terms) over time...at least in many countries....so it would appear to me. That in itself may be one of the best reasons to stack silver actually....at least for many average people." I can't understand the concept of silver being more affordable. 1/10 gold coin is $160: 7 once of silver $160. If you can afford 7 oz of silver you can afford 1/10 oz of gold. Silver isn't more affordable, it's just less precious. You can buy 1gram bars also. 1 gram of gold equals 2 oz of silver. In very poor countries they trade by dropping links off fine gold chains.
Point well argued....but perception plays a role in this too. A 1 oz coin or blob is sort of the default standard size that many stackers stack....not the only size....but I'd bet an ounce that every stacker has owned at least 1 X 1 oz size coin or blob but not every stacker has owned at least 1 X 1/25th oz size, or 1 X 1 gram size, or 1 X 1/10th oz size, or 1 X 2 oz size, or 1 X 100 gram size, or 1 X 5 oz size, or 1 X 1 kilo size, etc, etc, etc. Psychologically, 1 oz is a sort of default size....not 1/10th oz....at least not in the stacker circles I am familiar with. Therefore, it is far less likely, I believe, that the average stacker will be seeking out a 1/10th size niblet of gold when they can have 7 1 Troy oz of silver coins. It's a psychological thing. . .
The US GOV has the Gold/silver ratio as 1/50. This is based on face values of the coins the GOV produces. One ounce gold coin = $50 USD One ounce silver coin = $1 USD Until we get to that point I'm buying silver. Are other Countries "ratios" like this too?
theFNG, Nice try but bzzzzt, you're wrong...the US gov't also has fiat paper currency at $100 per gram. The U.S. gov't is NOT the default or even a sound arbiter of the GSR. .
If you are referring to the $100 dollar bill then technically that is issued by the FED not the GOV. If the dollar value was to reset I would think it would reset to this 1/50 ratio of gold. The value would be determined by the world's reserve currency (whatever that ends up being) spot price at the time of declaration. That way some people would already have the "new" dollar. They can immediately commence to printing and devaluing again. How would you go about determining the value of a new dollar other than this way? No disrespect, just learning. Keep on Stacking. P.S. edit: Maybe that is what the PTB are waiting for before crashing the USD. At this 1/50 ratio, if silver stays at $17 USD the 1/50 ratio puts gold at $850. I am not saying that the US determines the GSR, just that they do have one "established" or set in a round about way.
Follow-up thread: "sold my first 1 ounce gold bar what a mistake" OP: Maybe you'd like a gold coin more? I've yet to pick up any Au, and not sure I ever will. But if/when I do, it will most certainly be coinage -- not bars.
For me, since I live in the USA, would it not be correct to sell my silver at $17 USD to buy gold at $700 USD? Or vise versa if gold is at $850 and silver was at $5 since my country has established this 1/50 ratio? The ratio may be different in other countries, but I think it is only prudent to buy PM like this, otherwise you may loose out as far as currency in your country if the fiat fails.
Fed notes are issued by the Fed but in 1933, the part of the U.S. gov't called the Congress declared that Fed notes are legal tender in the U.S. There are also instances where where gov't federal and state courts have deemed Fed notes to be "lawful money". Whether a Fed note or a United States note, a $100 note weighs approximately 1 gram. The point of course is that why would it even matter what nominal value a legal tender note or coin has emblazoned on it? The U.S. Treasury and the Fed are not the arbiters of what the values of gold and silver are or should be. What is the point of entertaining the nominal value on these forms of money? The GSR may never return to less than 1:65 for any meaningful length of tiime in spite of the fact that a nominal "$50" is stamped onto a gold eagle and a nominal "$1" is stamped onto a silver one. Do you really want to look at the Fed or the Treasury to dictate what the correlative value of silver and gold is? I know I don't. The free market should determine these values. Also, if the dollar hyper-inflates and burns out of existence, the "$50" and "$1" nominal values stamped or printed onto U.S. money (legal tender) won't really mean that much to many or most people. That 1 oz gold Eagle bullion coin could become 200 times more valuable than the 1 oz silver Eagle bullion coin. I don't know and you don't know. What I do believe is that I don't want to let the Fed or the Treasury dictate what the value of these metals are. .
Both are good to collect and stack in my opinion. Both have advantages and disadvantages. I do think silver has more potential for upside, but there are larger premiums on it. And gold is also very transportable. In the long term I think that they will both perform well, so I wouldn't really worry at all about buying gold instead of silver.
I think I'm doing a poor job of communicating my thought. I know the US GOV/FED does not dictate the GSR or the values of the PM. The world market determines the value of an ounce of PM in each county's own currency. Or a new currency is created that will determine the cost per ounce verses another currency and then the world will trade it up or down from that point. The USA has stamped the face value in USD on their troy ounce coinage of gold and silver. They have a GSR of 1/50. In a dollar reset situation, I will not be buying things in other counties currencies. I will be using USD. So wouldn't it be best if I did not buy more ASE if the GSR was 1/30, instead I should sell the silver and buy gold eagles instead. This would insure I have the highest amount of the one that is devalued the greatest in terms of USD should the dollar reset. Where am I going wrong with my plan?
I Buy , , and . But the biggest percentage of my PM worth is in . My PM Asset Allocation Chart: [youtube]http://www.youtube.com/watch?v=LcV0GOkQk8c[/youtube]
An each way bet is non-committal. It is not a bet... it is a compromise. It says - "I don't really like this strongly enough to win so I'll back it each-way instead,". The psychology of an each-way bet is comforting for many, as we humans often can't face the prospect of being wrong. An each way bet presents a better chance of being "right" at some point in time, and if one of your bets is "right" then psychologically that waives the fact that the other was in fact wrong (most will choose to ignore this, though, and convince themselves it was a smart move ). Moreover, when analysing the risk/reward and returns of an each way bet, the numbers will clearly indicate the punter was wrong, and should have pursued better returns elsewhere. If a bet is not value for the win you should not be backing it in any way, shape or form. You maybe should be asking - "do you really consider silver a good investment at all? Should you risk any money? Maybe you should lower your allocation to an amount more comfortable or affordable?" Or, maybe ask yourself "since I am hesitant, am I informed enough to take the plunge on this one?"
Do you consider hedging in this context of an each way bet? I hedge my investments all the time. I buy physical and sell paper or buy/sell currencies and put some of the profits into physical metals as a hedge against currencies in general?
I do the same - regularly, but do not consider it an each-way bet. I use hedges to employ risk-management strategies on any long-physical positions - something that is not easily nor cheaply achieved by buying and selling physical. I will never take a position without a risk-management strategy, something you know about very well too.
i still don't get your point about it being for the uninformed. Is somebody who owns multiple asset classes (property, shares and PMs) only doing so because they are uninformed ? I would consider it an acknowledgment that the future is unpredictable. It might not be your exact definition of hedging but it is still hedging.
