1. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    Just pulled some posts and extrapolated the old standard GSR.

    Sovereign

    Value: 1 pound sterling
    Years of minting: 1817–present
    Diameter: 22.05 mm
    Design date: 1817
    Composition: .917 gold,.083 copper or other metals
    Designer: Benedetto Pistrucci
    Thickness: 1.52 mm
    Weight 7.9881 grams

    = 7.325 gms AGW

    1893 Victoria Crown (VF).

    Country
    United Kingdom
    Type Standard circulation coin
    Years 1893-1900
    Value 1 Crown (1/4 Pound)
    Metal Silver (.925)
    Weight 28.28 g
    Diameter 38.61 mm

    4 crowns, 1 pound, = 104.636 grams ASW

    Gold Silver Ratio = 104.636/7.325 = 14.28.
     
  2. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    This of course means that silver is 6 times too cheap and should be $132 per ounce, or that gold is too expensive and should be $310 per ounce.
     
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  3. whay

    whay Active Member

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    GSR Spurious Relationship

    An example of a spurious relationship can be seen by examining a city's ice cream sales. These sales are highest when the rate of drownings in city swimming pools is highest. To allege that ice cream sales cause drowning, or vice versa, would be to imply a spurious relationship between the two. In reality, a heat wave may have caused both. The heat wave is an example of a hidden or unseen variable, also known as a confounding variable.

    Another commonly noted example is a series of Dutch statistics showing a positive correlation between the number of storks nesting in a series of springs and the number of human babies born at that time. Of course there was no causal connection; they were correlated with each other only because they were correlated with the weather nine months before the observations.[5] However Höfer et al. (2004) showed the correlation to be stronger than just weather variations as he could show in post reunification Germany that, while the number of clinical deliveries was not linked with the rise in stork population, out of hospital deliveries correlated with the stork population.[6]

    Source: https://en.wikipedia.org/wiki/Spurious_relationship
     
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  4. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    Whay, I have to disagree. Gold and Silver are both monetary metals and have had a relationship over millennia. The ratio itself has waxed and waned over time and though not always interrelated, gives you the opportunity to flip between metals to better take advantage of current pricing.

    The current trend is to sell gold and buy silver in the belief that silver is about to rise at a faster pace than gold. When pricing has plateaued, sell silver to buy back gold.
     
  5. whay

    whay Active Member

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    Belief has the purpose of guiding action rather than indicating truth.
     
  6. alor

    alor Well-Known Member Silver Stacker

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    we need to live for ever to play this game a couple of times
    such a relationship
    nobody is ever in agreement with one another, but on occasions swap does take place

    yeah getting ready with my trade silver again
     
  7. Jislizard

    Jislizard Well-Known Member Silver Stacker

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    I just use the GSR as a guide to swapping between metals, like foreign exchanges in currencies.

    So far I have only done three GSR swaps and all in the same direction. If the GSR drops then I will swap back, if not, I just have a lot more silver than I started with. Either way I have silver or gold so I am not complaining.
     
  8. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    Yes, you have the belief which prepares you for action. You then take the action on fact. Luck is when opportunity meets preparation. A committed stacker is always ready!
     
  9. Ian Gillman

    Ian Gillman Member

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    I wrote a little program to run through the price data of gold and silver from 2000 to 2016. Its job was to calculate the 10 day price channel for GSR and do metal swaps when the GSR crossed one of the channel lines and then pulled back. It turns out that if you started with 1 oz of gold in 2000 and did the swaps you would do about 250 swaps and would end up with 2.9 ozs of gold. However, when you take into account the fees charged by online metal pools you would only end up with about 1.2 ozs of gold. That is still a profit but that profit is realised over 16 years and a bunch of effort.
     
  10. SilverDJ

    SilverDJ Well-Known Member

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    Summary: Pointless, and still subject to chance, market forces, and timing.
     
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  11. whay

    whay Active Member

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    Yeap. Just like house flipping that is used by RE agents to induce more sales.
    GSR is the favourite tools of metal dealers/pumpers to generate more trading profits .
     
  12. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    Interesting twist this thread is taking. GSR is just another tool in the shed, along with dips and rises, new releases, exceptional and bog ugly coins etc.

    It is a tracking ratio to help keep metal in perspective. There are other ratios to metal such as stocks, real estate, oil, and money of course that also help.

    I simply demonstrated the historical ratio when gold and silver prices were fixed. Since Easter 2011 it has gone up 2 1/2 times. Those, and I can name them, who favoured gold are doing well. Many have been churning there gold into silver in anticipation of a drop in the GSR.
     
  13. Ian Gillman

    Ian Gillman Member

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    I use the GSR to determine my target percentages for gold and silver in my stack. I just use the straight GSR as the silver percentage. It works out well because when the GSR is high I am buying more silver and when it is low I am buying more gold.
     
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  14. SilverDJ

    SilverDJ Well-Known Member

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    I'm still buying gold as it has the more guaranteed upside potential when the financial system tanks as it inevitably will.
    I already have enough silver to be happy that I didn't "miss the boat" is silver rises drastically faster than gold (I don't see a practical scenario where silver skyrockets whilst gold plummets)
     
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  15. whay

    whay Active Member

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    Once silver was taken out of monetary system the ratio went to the toilet. It may go up to a hundred and more. Silver has become an industrial metal only as no country uses it as currency. Only gold serve well for long term wealth preservation.
     
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  16. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    What if the world runs out of gold? As in easily "mined" gold.

    It may sound like a ridiculous idea, but gold production has been steadily dropping like 3-5% a year while aggregate demand has steadily increased although at a slower pace. As the price of gold rises and starts to affect balance of payments, we can't rule out the possibility that countries that don't produce gold will start to impose import or consumption taxes on gold. Countries that already have taxes on them will increase the taxes.

    Once gold is "suppressed" and the tax "premium" becomes unbearable, investors will switch to silver as a store of value as we have seen it happening in India right now.

    I remembered buying my first gold coin like 20 years ago and paid 3% GST and even 3% is almost bearable. Imagine a 7-17% GST/VAT. It will totally kill the investment demand for gold bullion because people are so used to paying only 1-3% premium over spot.
     
    Last edited: Mar 29, 2019
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  17. SilverDJ

    SilverDJ Well-Known Member

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    If I had to chose between sticking all my money in gold or silver in the ground for 30 years to pass onto my kids, I'd chose gold for sure, silver is more of a short to mid term gamble.
    But in reality I hold both. My current unallocated holdings are 30% silver, 70% gold.
     
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  18. Silver260

    Silver260 Active Member Silver Stacker

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    I actually share your sentiment on this one.... But the the last 30 years has produced an interesting result....

    Regardless of which you put your money into then, you'd basically have the same now... In USD. Of course, silver did nearly hit x10 once.

    Screenshot_20190329-174109.jpg

    Screenshot_20190329-174119.jpg
     
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  19. Silver260

    Silver260 Active Member Silver Stacker

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    I did forget to note though, in keeping with the original topic. That the GSR hasn't really changed in 30 years.

    Is this the new normal?

    I find it interesting that the silver price spiked much higher, relative to gold, during the last crisis. Was this because it's so much cheaper ( relatively ) ?

    What will happen next time, now that cryptocurrency exists?
     
  20. valuecreator

    valuecreator Well-Known Member Silver Stacker

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    The GSR can fall asleep for what seem forever.

    It is the calm before the storm.

    Expect the GSR and the Dow/Gold ratio to fall off their perch in the next year.
     

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