How balancing your silver and gold can increase your metal holdings

I am talking about ounces not dollar value here as I try to keep a 50-50 value balance in my gold and silver.

Here is an example with numbers easy to work with to see how this works.
Only last October the GSR ratio was 1:60 so I start with that as

60 oz of gold and 3600 oz of silver = 1:60

GSR drop to 1:50 Swap 300 oz silver to 6 oz gold
Your balance is now, 66 oz gold 3300 oz silver.

GSR drop to 1:40 Swap 320 oz silver to 8 oz gold
Your balance is now, 74 oz gold 2980 oz silver.

GSR drop to 1:30 Swap 360 oz silver to 12 oz gold
Your balance is now, 86 oz gold 2620 oz silver.

GSR goes back to 1:40 Swap 10 oz gold to 400 oz silver
Your balance is now, 76 oz gold 3020 oz silver.

GSR goes back to 1:50 Swap 8 oz gold to 400 oz silver
Your balance is now, 68 oz gold 3420 oz silver.

GSR goes back to 1:60 Swap 5.5 oz gold to 330 oz silver
Your balance is now, 62.5 oz gold 3750 oz silver.

Net profit is 2.5 oz gold and 150oz silver

These numbers and ratios for demonstration purpose only.
I am aware the GSR ratio only went to 30.45 on April 25 and did not go back to 1:60.
I only used these round numbers for demonstration only.
You can use your balancing act as suite you best

 

i'd be happy to sit back on 60 oz of gold and 3600 oz of silver and take my chances

 

I've been doing a similar thing - using the occasional $20 or $50 note to grease the wheels.

I look at it as a see-saw: sometimes I do get gold heavy, other times silver heavy, dependent on market fluidity.

Great advice Projack - well worth considering.

 

GSR under 40

Gold / Silver Ratio
39.99

 

It just needs to get in the mid 30's if I can get 2 ozs of gold for under 70 ozs of silver I'll be a happy camper!

 

Greedy bugger that I am, my trigger back in April was 30 (to initiate ).
Didn't eventuate then, so thought I was left holding the bag. Albeit a very pretty silvery bag....

Biding my time....*taps fingers together Monty Burns-style*

 

How would you convert silver to gold? Would you take it to a dealer? Or sell it in the open market and then buy the other metal with the proceeds?

 

If unable to do it on this forum, my fallback would be to talk to a bullion dealer and perform the 'swap' (sell silver and buy gold) and pay the premium. Not sure if this is feasible or not, would a bullion dealer entertain such a thing? I guess so if there was a buck in it?

 

I know ozbullion would buy back at spot and you can then use that money to buy some stuff off of him.

Not sure if they have a Canadian equivalent over there.

Person to person swaps are the best since both sides are usually happy with the swap and the result is less cost for both sides.

 

I'd probably see if I could work a fair trade at the coin shop I frequent. Either that or sell private at a premium and then buy from vcbe or silvergoldbull

 

You do not need direct swap.
Sell eBay or here for market price and buy here or wherever you get the best deal

 

Makes sense.

I guess the best scenario would be to do a swap with a person, second best would be to sell at market price and then buy from a dealer, with their markup.

 

projack.. What you say about the USA not reducing its debt for 50years but for 40 of those 50 years it only went up in small $ & % terms..The last 10 years tell a different story with the debt rising more in one year since around 2000 than all the other 40 years added together.

Business does not pay hardly any tax in the USA..Even the author of "Rich Dad Poor Dad" doesnt pay tax and he tells you in his writings that if you want to be rich don't pay tax by finding a good accountant.

Then it's up to the middle class to pay off the $14,000,000,000,000+ debt. Most will finish up poor I tell you.

I like your action plan in increasing your silver and gold by using the swap method. Long as not too many do the same thing at he same time..

I admire the young people on this site who have a SMSF.. These are the people with enough guts to manage their own affairs and don't rely on the so called financial experts..

Thanks for all your posts as you are one of many who make the ss site what it is. A happy place of differing views on some issues but on silver we are all together.

Regards Errol43

 

I'd file this one under "Good in Theory".

There's no free gold and no free silver I'm afraid.

In the scenario there are 6 theoretical trades (that may be made up of smaller trades to make up the balance).

In those trades a total of 2110 ounces of silver changes hands, and 49.5 ounces of gold is traded.

Even at a 5% premium on each trade it would cost you the equivalent of 105 ounces of silver and almost 2.5 ounces of gold to accomplish those trades in premiums.
That leaves only 50 ounces of silver to show for the 6 transactions.

In practice the selling and buying of the 70 kg of silver and 1.5 kg of gold in the multiple trades necessary, including all the postage, insurance, and legwork makes that a no go for me.

Like Blockhead I'd just sit on the 60 ounces of gold and 3600 ounces of silver. The increase is only 4.2% in each metal at the end of all that work. For some it might be worth it, but it's just too much work for the amount gained.

It doesn't even take into account possible losses etc. Remember that what you gain someone is losing. Also remember that in this case the swaps appear to always go in the traders favour. The ratio could move further away from the trade and you could be realising a loss.

Instead of all that work, what I suggest is that you put in the extra money that you'd spend in premiums to do all these trades on actual gold and silver at the respective times. That way you are halving your work and always buying with fiat.

 

Nice theory projack.

But it relies on making the correct trade each time. Since there are no guarantees, it can cost you if the GSR keep going south after the 3rd trade and hung around 20:1.

Cheers,

Slam

 

That's a good strategy, especially if you have acquired a large core position with a bit extra. Use the bit extra outside the core.

I wonder, those of us beginners having a long way from a core goal, an alternative might be
- when GSR makes either one 'cheaper' stack that instead, and save on premium loss of above strategy.

I suppose that is more conservative simple stacking vs riskier trader stacking.
Anything that uses hindsight to justify, inherently carries more risk (and stress).
It is my expectation that the GSR will become more and more meaningless in a digitally printed fiat world, ie between now and when pm 'money' status is achieved.

 

It works for me already.

when silver was cheap, went all in, when silver was near recent high 49, took them out and swap to gold, but you have do take profits regularly.
it can not be done all at once. not many people willing to part with silver when it went up 2-5 dollars a day. so swap them, that will help you realised your profit in gold or silver.

that may be a reason I am here, get my profits.

swap only if both parties are happy, or else you may not trade again with the same guy in the future.

 

may be this is what we call comparative advantage in economic 101, but in metals format.

 

This strategy was not set up to gain financial benefit, but to balance my 50-50 holdings. Gaining extra ounces is only the side affect. You do it when opportunity present and not pushing it at all cost, as GSR movement is relatively slow anyway.
Buying gold and silver for spot never was a problem for me, and shouldn't be for anyone else if you aren't after the fancy products.
Just yesterday someone offered 5 kilo sliver bar for spot including postage. I did not buy it because I was after larger quantity of gold yesterday, and recently someone here in Brisbane supplying me with kilo bars at spot, but normally I buy these offers if no one takes them. On the gold side Spotmex is offering 1 oz gold bars at spot quite often (even today), but sometimes even 15 oz at the time. Selling at spot no problem most of the time especially if you are not in hurry for financial reasons. However once you past a creation level your core holding should be on non brand (or premium paid) products anyway, because large amount of liquidation force you to bullion dealers offerings 1.5-2% bellow spot regardless of brand names. This is the fastest way to jump over to something else more rewarding and selling out fast like the dragons coming out in September. So this is you best hedge because you know the silver dragon will cost you $0.60 cent extra/coin on premium and $25 in case of gold even in the worst case dealer dump scenario.
Finally I must point out no one is loosing here because this is a buy and sell event if the same person involved and even the trade goes against you all the way from 1:60 to 1:30, but on the long term both metal is going up, but not at the same rate all the time. This is what you take advantage.

 

Ninety-seven percent of today's funded Treasury debt total has been accumulated since 1971. Sixty percent of it has been added in the past decade. Forty percent of it has been added since the first signs of the GFC emerged in early 2007, yet the US is held to be solvent because it CAN raise its debt "limit".
The US government is now borrowing somewhere between 40-45 cents of every Dollar it spends, so a truly balanced budget would require the US government to cut their spending almost in half or to almost double their tax take or to find some mixture of the two which did the job.
Let's assume that the US government actually did that. First that would not cut already existing Treasury debt at all, it would only stop it from expanding further.
This unprecedented borrowing has done NOTHING for the US economy. Nor has it done much more for US economic "growth" other than to compensate for the banks which are not lending and the US public which is not borrowing. Like that of any other nation, the US economy is geared to and dependent on borrowing and spending. That borrowing and spending has dried up and/or is drying up in the "private" sector. Since the US Fed dropped its interest rates to zero, the global economy has become dependent on government spending just to stand still.
Were this borrowing to cease, as it would have to under a balanced budget amendment, this unstable "balance" would be instantly crushed. When unsustainable and unrepayable debt is the foundation of a global system of finance, no other outcome is possible. There is no escape and the only solution is to change the system at the root, at the level of money.