Gold to Silver Ratio

M

Miser

New Member
Forgive if this question has been asked before, but for those of you who use a the gold:silver ratio as a purchasing guide, at what point do you find gold the better investment over silver?

50:1?

30:1?

I am interested in everyone's reasoning. Thanks!
 
I have bought gold even in the 70:1 range. I do think you should hold both gold and silver, but I have gone to just silver these days due to the ratio. I think if it was around 50:1 I'd consider buying more gold and under 40:1 I'd start making it the lion's share of purchases.

I know plenty say it should trade at the historical and mined 12:1 or 10:1 but the simple thing is with ETFs as they are it will never happen as anything other than some crazy spike. The market is too diluted.
 
For what it is worth

Above 55 I buy silver
Below 50 I buy gold

In between I buy whatever the best offer is.

Haven't bough gold for a long time and most of it has been swapped for silver now. Just waiting for it to swing back the other way.
 
Jislizard said:
For what it is worth

Above 55 I buy silver
Below 50 I buy gold

In between I buy whatever the best offer is.

Haven't bough gold for a long time and most of it has been swapped for silver now. Just waiting for it to swing back the other way.
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Jislizard,

Thanks for your reply and suggestion. So for today or this week, it is better to buy silver :D
 
For a presentation I gave on ratio trading I tested all combinations of buying Gold for ratios between 44 to 61 and buying Silver for ratios between 63 to 80 which gives 324 different trigger combinations. Starting with USD 10,000 in 1982 the results are:

Best return was $269,783 swapping silver to gold at 44 and swapping gold to silver at 77
Worst return was $51,112 swapping silver to gold at 61 and swapping gold to silver at 63

All the combos:

25160_ratiotrade.png
 
@bron.suchecki,

So is that ratio based on the International standard 30 Day Gold / Silver ratio chart ?
 
Based on daily londox fix prices, that is the only reliable and complete data set going that far back. I could have went back to 1968 but there was a step change in the ratio shortly after 1980.

I will have to do a video of my presentation slide as there is more detail of course.
 
bron.suchecki said:
Based on daily londox fix prices, that is the only reliable and complete data set going that far back. I could have went back to 1968 but there was a step change in the ratio shortly after 1980.

I will have to do a video of my presentation slide as there is more detail of course.
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bron.suchecki,

That's great, let us know where can we get your pressy / slides once it is finished.

I'd love to study about precious metals investment.
 
bron.suchecki said:
I don't think running that model on a 30 day moving average would change the results much, BTW.
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bron.suchecki,

If that's the case, then is one year sufficient to act on it ?
 
If you look at the last 3 major GSR peaks then they have all hit 80 before reversing.

image003.jpg


We hit 80 back in Feb
1825d_sm_gold_silver_ratio.gif

365d_sm_gold_silver_ratio.gif


But of course that doesn't mean that it'll follow suit this time. I'm still buying gold.
 
masmas said:
If that's the case, then is one year sufficient to act on it ?
Click to expand...

Not sure what you mean by one year?

Note that the ratio works if you are thinking in terms of ounces. The ratio moving in the direction you want does not mean the dollar price of metal goes up.
 
Nice work Bron! I would also like to watch a video presentation as there is not always a lot of reliable info available on the subject and my financial adviser just considered it to be a forex exchange but didn't have any advice on when to swap.

I swapped 25% of my unallocated gold to silver at 65, another 25% at 70, another 25% at 75 and the last of it at 80. If it had gone up to 85 I would have swapped some physical gold as well but it didn't quite make it. At the time those GSRs were set the GSR had been bouncing around 50 for a fair time.

Would it be a better idea to wait for a higher GSR and then swap a greater percentage or is the more cautious approach less risky? I was just concerned that if I set the GSR threshold too high I might miss out on opportunities to realise smaller gains.

It was a lot of fun though and I am looking for the GSR to reverse. I was considering a staged approach to swapping the silver back to gold as well. Not sure what my exact GSR figures are but I think they are around 45, 40, 35 and 30.
 
For simplicity I limited my modelling to swapping 100% at one trigger point in the ratio, but averaging in like you did is a safer way as we can't assume that the past will repeat. If the ratio turns earlier than you expect at least you have a position. Plus there could be fundamental changes in the market, see below.

25160_structural.png


I'll have a look at building in a % averaging in to my model. And get on to recording the presentation and putting it up on youtube.
 
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