GSR going up

Kam

Kam

Active Member
Silver Stacker
Hi,

Gold is up 13% since the 1st Jan while Silver has only made 7% progress

Gold has recently cleared major price barrier @ 1350USD however Silver is still lagging behind and struggling to make its way through $21.50 then $22

What could be the reasons behind Gold outperforming Silver to that extent ?

Cheers
 
Hmm, uncertainty in Ukraine/Crimea = bullish for gold

Weakness in China markets = bearish for silver (industrial metal?)

I was wondering the same thing. Good thing I have both though.
 
Silver always lags gold. The elite call the shots by buying gold, the paupers see this and buy silver. Copperwhatshisname, scum of the earth, buys copper.
 
Because gold is classed as a monetary metal at an institutional level and tied into our fiat banking system, it will follow economic ebb and flow more closely. Silver has mostly industrial demand which creates a lagging effect.

If institutions continue to buy up gold during these economic uncertain times then there is no reason why the GSR will continue into the 100's. Something to note is there is more above ground gold than silver, which gives you an idea of the demand manipulation of gold.
 
Kam-L said:
Hi,

Gold is up 13% since the 1st Jan while Silver has only made 7% progress

Gold has recently cleared major price barrier @ 1350USD however Silver is still lagging behind and struggling to make its way through $21.50 then $22

What could be the reasons behind Gold outperforming Silver to that extent ?

Cheers
Click to expand...
Silver people acting less stupid than buying the pump and dumpsters yet another free ride.
Me included.

Cheers.
 
Gold to Silver ratio (GSR)

Chart is for the period 03 Feb - 15 March 2014.

Just a guide, DYODD :)

GSR14March2014_zps1b61072a.png
 
Fact check.

High GSR ( > 60 ) = buy silver in preference to buying gold.

Correct?
 
Altima said:
Hmm, uncertainty in Ukraine/Crimea = bullish for gold

Weakness in China markets = bearish for silver (industrial metal?)

I was wondering the same thing. Good thing I have both though.
Click to expand...

Good question Kam-L! It is clear that the Russian crisis has nothing to do with this as the ratio has been going up since the middle of Feb and if you step back since the beginning of the move in gold from Dec 31. Rick Rule last year predicted that Pt and Pd would be the first to move followed by gold and silver would be the last. That is what has happened now we will see if Ag breaks over $26 or if gold comes down. I think the former ? The industrial demand is a red herring as the crash in base metals will see Ag production fall (by product) and this is another positive for silver prices. I think these next few weeks are going to be critical. This week in particular with the FOMC meeting.
Solution - diversify into gold, Pt and Pd.
 
swoydaz said:
Fact check.

High GSR ( > 60 ) = buy silver in preference to buying gold.

Correct?
Click to expand...

I don't think so. If you use gold as the unit of currency, silver is currently very cheap at 1/65. If say, GSR drops to 32.5, then the silver bought at 1/65 will double your gold.

This is said on the assumption that silver will catch up to gold and subsequently the GSR will drop. Assumption x 2.
 
sammysilver said:
swoydaz said:
Fact check.

High GSR ( > 60 ) = buy silver in preference to buying gold.

Correct?
Click to expand...

I don't think so. If you use gold as the unit of currency, silver is currently very cheap at 1/65. If say, GSR drops to 32.5, then the silver bought at 1/65 will double your gold.

This is said on the assumption that silver will catch up to gold and subsequently the GSR will drop. Assumption x 2.
Click to expand...
So on your analysis, and allowing for the assumptions you make, buying silver is preferable at the moment to buying gold. Why do you then contradict yourself by saying "I don't think so." ?
 
swoydaz said:
I wonder if waiting for the STHTF would be leaving it too late?
Click to expand...

It's an arbitrary choice, let's say you can live on 16oz silver per week when the SHTF. In four weeks that would translate to 1oz gold at the current GSR. You would then need 832oz silver or 12oz gold for a full year. The silver will be easier to spend, but the gold will be easier to hold.

I won't buy gold at the current GSR, but would be tempted at sub 48.
 
A year or so back I dug up historical G:S ratio data for around 10 years and found that if you had used inflection points of 50:1 and 68:1 to trade from one to another and somehow limited transaction costs to 5%, your holdings would have increased by better than double. That was measured in oz of metal, not money. There were only 4 or so inflection points in the time frame. But if the ratio makes it to 68:1, trade your gold for silver and at 50:1 vice versa.
 
Altima said:
How easy is it to get people to trade their gold for silver at low GSR?
Click to expand...

Easier with an unallocated account and a dealer who is interested in facilitating it. Harder with physical, postage costs and discussing the premiums attached to each side of the deal.

I would really like to hold until 70:1, @TomD: what was the highest it reached nithe period you looked at?
 
sammysilver said:
Altima said:
How easy is it to get people to trade their gold for silver at low GSR?
Click to expand...

Sell your silver and buy gold if there are no swaps about.
Click to expand...

Then the GSR swap gets expensive, especially through a dealer who will only give spot for your silver but still charge premiums for the gold. More transactions means more postage costs and time spent organising and the more complicated a thing is the more likely something is to go wrong.

I last did a GSR swap for gold when the GSR was 53. I was swapping dirty predecimal florins for OMP 1/4 Gold Maples, so I had to be generous with my side of the deal. I wanted the maples but didn't have any spare cash to buy them so from a financial side of things it wasn't a bargain but at least I got a whole lot of shelf space back.
 
Jislizard said:
sammysilver said:
Altima said:
How easy is it to get people to trade their gold for silver at low GSR?
Click to expand...

Sell your silver and buy gold if there are no swaps about.
Click to expand...

Then the GSR swap gets expensive, especially through a dealer who will only give spot for your silver but still charge premiums for the gold. More transactions means more postage costs and time spent organising and the more complicated a thing is the more likely something is to go wrong.

I last did a GSR swap for gold when the GSR was 53. I was swapping dirty predecimal florins for OMP 1/4 Gold Maples, so I had to be generous with my side of the deal. I wanted the maples but didn't have any spare cash to buy them so from a financial side of things it wasn't a bargain but at least I got a whole lot of shelf space back.
Click to expand...

I'm use to dealing F2F in the city where there is no postage. As to losing on premiums, bear in mind that you traded at 53, and if you swap back today at 65 you will be aprox 12oz ahead. Covers a lot of sins.
 
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